GBM Resources unlocks value with Mt Morgan sale, Lithium Energy commits A$4m

GBM Resources has officially confirmed the sale of its Mt Morgan gold-copper project in Queensland, transferring 100% ownership of the tenements to Lithium Energy Limited in a definitive agreement valued at AUD 3.7 million. The Mt Morgan project sale is part of GBM Resources’ broader strategy to focus on its Drummond Basin gold assets, allowing the company to optimise capital allocation while maintaining financial exposure to the project’s potential future upside.

The Lithium Energy acquisition also includes additional adjoining tenements acquired from Great Southern Gold Corp, a private Canadian company. Lithium Energy’s AUD 4 million exploration commitment over the next two years signals its intent to advance the project with systematic drilling and feasibility studies to assess the site’s gold and copper potential.

How Is the Mt Morgan Project Sale Structured?

The transaction follows a structured multi-payment model, ensuring GBM Resources benefits from both immediate liquidity and potential future revenues. The company will receive AUD 2.03 million in cash, paid in staged instalments over a two-year period. Additional contingent payments of up to AUD 1.67 million will be made upon reaching key exploration and feasibility milestones. GBM Resources will also retain a 1.33% net smelter return (NSR) royalty, granting it a share of future revenue from mineral extraction, with a partial buyback option available to Lithium Energy.

The Lithium Energy acquisition will be executed in two phases. The first tranche will see the transfer of 51% of the tenements and 100% of the mining information to Lithium Energy upon satisfying agreed-upon conditions. The second tranche, scheduled for completion 21 months later, will transfer the remaining 49% interest, finalising the deal.

Why Did GBM Resources Sell the Mt Morgan Gold-Copper Project?

GBM Resources’ decision to divest the Mt Morgan project aligns with its portfolio optimisation strategy, focusing on core gold assets in Queensland’s Drummond Basin, where it holds approximately 1.84 million ounces in JORC resources. The AUD 3.7 million transaction provides immediate financial flexibility, enabling GBM to accelerate exploration and development at its Drummond Basin gold sites. The sale also supports GBM Resources in repaying its convertible note, strengthening its financial position.

By structuring the deal to include contingent payments and royalties, GBM Resources ensures continued financial exposure to the Mt Morgan project while transferring operational risks to Lithium Energy. Should the project yield successful exploration results, GBM Resources will still benefit through milestone-based payments and future royalty earnings.

What Are Lithium Energy’s Plans for the Mt Morgan Project?

With the Mt Morgan project sale finalised, Lithium Energy plans to commence an aggressive exploration program aimed at uncovering large-scale gold and copper deposits. The company has committed AUD 4 million in exploration spending over the next two years, ensuring a well-funded strategy that prioritises drilling, resource estimation, and metallurgical studies.

Lithium Energy’s acquisition of additional tenements from Great Southern Gold Corp further strengthens its exploration footprint in Queensland, increasing the probability of significant mineral discoveries. The company’s immediate focus will be on geological assessments and initial drilling campaigns, with an emphasis on confirming the economic viability of the Mt Morgan gold and copper deposits.

How Will This Transaction Impact Investors and Market Sentiment?

The GBM Resources transaction is expected to have a positive impact on investor sentiment. For GBM Resources, the sale provides immediate capital, strengthens its balance sheet, and allows the company to focus its resources on advancing its Drummond Basin gold projects. The deal also offers an alternative revenue stream through contingent milestone payments and future royalty earnings, which could boost long-term valuation.

For Lithium Energy, the acquisition marks a significant expansion in its exploration portfolio. The AUD 4 million expenditure commitment underscores confidence in the site’s potential, increasing expectations of strong future valuation growth. Investors will be closely monitoring upcoming exploration results and resource updates, which will serve as indicators of the project’s economic viability.

What Are the Next Steps for GBM Resources and Lithium Energy?

With the definitive agreement executed, both companies will now work toward tranche completion and regulatory approvals. Lithium Energy will begin its exploration program, focusing on targeted drilling and feasibility studies. Meanwhile, GBM Resources will continue developing its Drummond Basin gold assets, with an emphasis on resource expansion and further drilling campaigns.

As the Lithium Energy acquisition progresses, market analysts will be watching for key milestones in exploration and feasibility studies, which could shape the future commercial viability of the Mt Morgan project. If the project delivers positive drilling results, it may pave the way for a Definitive Feasibility Study (DFS), unlocking further investment opportunities.