After hinting that something big was coming at the Resources Rising Stars Conference on the Gold Coast in September 2024, MI6 opened 2025 with the announcement it was acquiring the Bullabulling project from Chinese major Zijin Mining for A$166.5 million in cash and shares.

Due to the previous modest size of MI6 and the quantum of the deal, the company was required to go through a re-compliance listing on the ASX.

MI6 closed a A$220 million capital raising at A12c per share earlier this month, a major achievement for a company with a market capitalisation of just A$30 million when the transaction was announced in early January.

Speaking at the RRS Gather Round Conference in Adelaide two weeks ago, MI6 managing director Luke McFadyen said the company had received strong support from overseas institutions, including North American long-only gold funds, domestic institutions, as well as high-net worths and retail investors.

Goyder, who chairs MI6, chipped in A$12 million, taking his stake from 6.1% to 7.26%.

“If you want to see confidence in a project, look where the money comes from and every single director of this company has invested in this capital raise,” McFadyen said.

Yesterday, Sydney-based boutique firm Samuel Terry Asset Management emerged as a substantial shareholder with a 5.6% stake.

Awakening Bullabulling

The project was developed by Resolute Mining, but it was put on care and maintenance in 1998 when the gold price was around US$500 an ounce, after producing 179,000 ounces of gold.

Norton Gold Fields, a subsidiary of Zijin, acquired the project in 2014 and while Zijin had carried out some work, the project was deemed to be non-core.

“It’s been sitting dormant in a large Chinese company for a decade or more and it’s our plan to reinvigorate it and get it back into production,” McFadyen said.

The infrastructure-rich project has an existing resource of 60 million tonnes at 1.2 grams per tonne gold for 2.3 million ounces of gold.

“From an acquisition perspective, almost the majority of the deals are under a million ounces,” McFadyen said.

“Something above 2Moz is rare. It’s hard to acquire 2Moz.”

The acquisition price equated to A$72 an ounce, while the gold price is up by more than A$500/oz since it was announced.

Drilling underway

Last week, MI6 kicked off an 80,000m drilling program, which will feed into a resource update at the end of the year.

While 530,000m has been drilled previously, not much drilling has been completed at depth and as a result, the resource is open down-dip.

“It made sense not to keep drilling when the gold price was US$500 or US$600 an ounce,” McFadyen said.

“What we will do, with a completely different context, with a completely different gold price, is drill deep.

“The lowest-hanging fruit we see is to drill very deep and a lot of holes and that’s why I say we’re confident the resource moves up at the end of this year.

“We know already from the existing resource, that from an ounces per vertical metre perspective, it’s between 10,000 and 20,000 and it gets higher the deeper you go, so to give you a rough calc, if we add another 100m to this resource at those ounces per vertical metre, we add between 1 and 2 million ounces.”

The resource is also open along the 8.5km strike.

“I’d be very surprised if we stopped at 80,000m,” McFadyen said. “With $50 million cash in the bank, we’ve got more than enough cash to keep going if we want to.”

On the fast track to production

Economic studies are already underway and MI6 believes it could be in production by the second half of 2028.

The acquisition included an exploration camp and offices, while the project has access to power, water and the Great Eastern Highway.

The resource sits on granted mining leases and a Native Title Land Use Agreement is in place.

McFadyen said the project featured “boringly simple” metallurgy with carbon-in-leach processing expected.

In an initiation note released last week, Argonaut head of research Hayden Bairstow said a development of Bullabulling was likely.

Bairstow’s capital and operating cost assumptions were based on Capricorn Metals’ Mt Gibson project, another large-scale open pit development.  

“Leveraging its 2.3Moz resource, we believe a development at Bullabulling can underpin a 5Mt per annum open pit operation producing around 140,000ozpa,” he said.

“There is also significant scope for MI6 to materially expand the resource base, both at depth and along strike and this presents upside risk to our base case.”

Argonaut initiated with a speculative buy rating and A30c price target, which is more than double the current share price.