Nex Metals to Operate North Hennai with 44% Profit Share After Cost Recovery
Nex Metals Explorations has secured a binding agreement to operate the North Hennai gold project in Egypt’s Eastern Desert, marking its strategic entry into one of the world’s most under-explored mining regions with promising production and exploration potential.
- Binding Heads of Agreement signed for Nex Metals to operate North Hennai gold project
- Nex Metals to fund 100% of costs and receive 44% profit share post-cost recovery
- North Hennai currently small-scale production with significant upside from process improvements
- Technical Assistance agreement established with local partner Golden Eagle
- Egypt’s Eastern Desert recognized as a highly prospective but under-explored gold district
Strategic Entry into Egypt’s Eastern Desert
Nex Metals Explorations Ltd (ASX, NME) has taken a decisive step into the Egyptian gold mining sector by executing a Binding Heads of Agreement to become the operator of the North Hennai gold project. Situated in Egypt’s Eastern Desert, this project offers Nex Metals a foothold in a region widely regarded as one of the world’s most under-explored and promising gold districts.
The Eastern Desert is home to AngloGold Ashanti’s Sukari mine, a large-scale operation that produced over 450,000 ounces of gold in 2023. Against this backdrop, North Hennai’s current small-scale production is modest but holds considerable potential for growth through enhanced mining processes and targeted exploration.
Favourable Terms and Local Partnerships
Under the agreement, Nex Metals will fully fund exploration and production activities, recovering all costs upfront before sharing 44% of profits with local partners Golden Eagle Mineral Resources Company and Shalateen Mineral Resources Company. This arrangement not only aligns incentives but also ensures Nex Metals’ operational control and financial priority.
Complementing this, a Technical Assistance agreement with Golden Eagle provides Nex Metals with vital local expertise, covering mining operations, geological modelling, processing plant reviews, and operational strategy. This partnership is critical for navigating the unique challenges and opportunities of the North Hennai concession.
Unlocking Production and Exploration Upside
The North Hennai project currently operates two shallow open pits with rudimentary mining techniques. Nex Metals plans to implement improved production methods, including potentially introducing heap leaching to increase metallurgical recovery and throughput. These enhancements could transform the project’s economics with relatively low capital expenditure.
Exploration at North Hennai has historically been limited and unsystematic. Nex Metals’ recent due diligence identified promising targets for expedited drilling and sampling, with plans to apply geochemical techniques proven in Western Australia’s goldfields. The company aims to unlock additional value by systematically exploring the 16 square kilometre concession area.
Looking Ahead
While the agreement is subject to final due diligence and approvals, Nex Metals’ move into Egypt’s Eastern Desert signals a strategic diversification beyond its established Western Australian projects. The company’s Managing Director, Ken Allen, highlighted the region’s potential and the intention to expand exploration and production activities further.
Investors and industry watchers will be keen to monitor Nex Metals’ progress in refining production processes and advancing exploration results, which could redefine the company’s growth trajectory in a new and exciting jurisdiction.
Bottom Line?
Nex Metals’ entry into Egypt’s Eastern Desert could reshape its growth story, but much hinges on successful due diligence and unlocking the project’s latent potential.
Questions in the middle?
- How will Nex Metals’ planned production improvements impact gold output and costs at North Hennai?
- What exploration results will emerge from the upcoming drilling and geochemical surveys?
- Could Nex Metals expand its footprint further in Egypt’s Eastern Desert beyond North Hennai?
