MGX Resources has completed its $50 million purchase of a 50% stake in the Central Tanami Gold Project, setting the stage for underground development while managing low-grade iron ore sales and rehabilitation at Koolan Island amid weather disruptions.
- Completed 50% acquisition of Central Tanami Gold Project for $50 million
- Macmahon Underground selected for Groundrush exploration decline construction
- Koolan Island low-grade iron ore shipments delayed by wet season but set to increase
- Rehabilitation on Koolan Island on track for mid-2026 completion
- Strong cash reserves of $414.7 million maintained despite market pressures
Central Tanami Acquisition Sets Development in Motion
MGX Resources (ASX:MGX) has taken a decisive step towards establishing a gold production business with the completion of its $50 million acquisition of a 50% interest in the Central Tanami Project Joint Venture (CTPJV) in the Northern Territory. This move follows the earlier announcement of the deal and now places MGX alongside joint venture partner Tanami Gold NL in managing one of Australia’s highest-grade undeveloped gold projects, boasting a 2.8 million ounce resource at an average grade of 2.8 grams per tonne.
Since closing the transaction, MGX and Tanami Gold have been actively collaborating to chart the path toward a development decision expected within 12 to 18 months. The CTPJV’s management committee has outlined a 2026 work program focused on infrastructure upgrades, regulatory approvals, resource drilling, and processing plant evaluations.
Notably, the joint venture has selected Macmahon Underground as the preferred contractor for the construction of the Groundrush exploration decline, a critical underground access development aimed at converting over 400,000 ounces of inferred resources to indicated status. This $38 million project, scheduled to commence in the September quarter of 2026 pending contract finalisation, will extend approximately 3,500 metres underground and is expected to span 14 months. The decline will enable drilling to depths of 500 metres, a vital step for advancing mine planning.
Positive engagement with the Northern Territory Government, regulators, and the Central Land Council underlines a supportive environment for the project’s advancement, an encouraging sign for stakeholders navigating the complexities of remote mining development.
Koolan Island Sales and Rehabilitation Underway Despite Weather Challenges
Meanwhile, MGX’s Koolan Island iron ore operation continues to manage the aftermath of the October 2025 rockfall incident that halted mining activities. The company has shifted focus to selling low-grade stockpiles to help fund rehabilitation, with 0.39 million wet metric tonnes shipped during the March quarter at a grade of 44.2% Fe. These shipments were delayed due to cyclonic wet season interruptions but are now ramping up to meet a June half-year target of 1.0 Mwmt.
Rehabilitation work is progressing steadily, with $6.6 million spent on earthworks including landform profiling, ripping, seeding, and preparation for infrastructure removal. The rehabilitation program remains on track for mid-2026 completion. Discussions are also ongoing with Traditional Owners and third parties about potential post-mining uses for the site’s key infrastructure assets, including the port and accommodation facilities.
Operationally, Koolan Island recorded a $15.3 million cash outflow in the quarter, impacted by rehabilitation costs and weather-related shipment delays. However, MGX expects a positive operating cash flow in the upcoming quarter as shipping frequency improves following the wet season. Diesel fuel costs have risen due to Middle East conflicts but have not yet disrupted supply, thanks to long-term contracts and careful fuel management on site.
Financial Position and Exploration Activities Support Growth Ambitions
Despite paying $50 million for the Central Tanami stake and facing market value reductions in equity investments amid geopolitical tensions, MGX ended the quarter with robust cash and investment reserves of $414.7 million, equating to approximately $0.35 per share. The company carries no bank debt, providing financial flexibility to pursue its development objectives.
MGX also holds equity stakes in other Australian resource companies, including a near-5% interest in copper producer AIC Mines Limited and a 5.1% interest in Maronan Metals Limited, alongside a significant position in Fenix Resources. These investments could offer strategic opportunities as market conditions evolve.
On the exploration front, MGX is reviewing its newly acquired 3,600 square kilometres of wholly-owned tenure around the Central Tanami region to develop a regional strategy. In Western Australia, weather and contractor availability have delayed drilling programs in the Mid-West and Gascoyne regions, with activities now expected to commence mid-2026.
MGX’s recent financial results, reported in February, showed a net loss after tax of $20.8 million for the December half-year, largely due to a $60.3 million impairment following the Koolan Island rockfall. This loss contrasts with an underlying profit before impairments of $39.9 million, highlighting the operational resilience beneath the one-off event. The company’s pivot toward gold with the Central Tanami acquisition represents a strategic shift toward higher-margin production potential.
These developments build on MGX’s earlier navigates Koolan rockfall efforts, where the company managed significant operational disruption while preparing to capitalise on the Central Tanami opportunity.
Bottom Line?
MGX’s dual focus on advancing a high-grade gold project and managing Koolan Island’s rehabilitation positions it at a strategic crossroads, with upcoming contract finalisations and drilling results set to clarify the viability of its growth ambitions.
Questions in the middle?
- Will the binding agreement with Macmahon Underground be finalised on schedule to start Groundrush decline construction?
- How will ongoing geopolitical tensions impact MGX’s equity investment portfolio and funding capacity?
- What are the prospects and timelines for converting inferred resources at Groundrush to indicated status through underground drilling?