Kingston will merge with Brisbane-based WCB Resources via a Canadian plan of arrangement.
WCB owns 49% of the Misima gold project in Papua New Guinea, a historical open pit mine that produced around 3.7Moz of gold and 22Moz of silver in the early 1990s, under the ownership of Placer Dome.
The mine was closed in 2001 due to low gold prices at the time.
WCB recently upgraded the NI 43-101 resource to 73 million tonnes at 1 gram per tonne gold for 2.3Moz.
WCB shareholders will receive 4.5 Kingston shares for every one share held, with WCB shareholders to wind up with around 31% of the merged entity.
The acquisition cost for Kingston equates to less than A$5 per ounce of gold.
WCB is earning up to 70% of Misima from Pan Pacific Copper, joint venture between JX Nippon Mining and Metals and Mitsui Mining and Smelting.
With $3.9 million cash at the end of June, Kingston is fully funded to meet the remaining expenditure of $2.2 million by March 2019.
The priority for Kingston will be to establish a JORC resource, as well as an exploration target, followed by drilling and mining studies.
Kingston has previously been focused on gold via the Livingstone project in Western Australia, and lithium in the Northern Territory.
“The merger of Kingston Resources and WCB Resources creates a strong platform for shareholders to benefit from a substantial value uplift driven by an acceleration in exploration activity at the Misima gold project, the emerging Livingstone gold project, and exploration within the group’s extensive lithium landholding,” Kingston managing director Andrew Corbett said.
The existing WCB directors will resign following completion of the merger, though CEO Cameron Switzer will remain as a technical consultant to Kingston.
The boards of both companies unanimously back the deal, as does WCB’s 37.5% shareholder Sandfire Resources.
Sandfire invested $6 million in WCB in 2014 due to the copper porphyry potential at Misima.
Co-founded by Peter Lynch, the resource sector executive killed in a February plane crash in Perth, WCB looked to form a joint venture with Kula Gold early in 2016, with the idea being the two companies’ projects on adjoining islands could be combined into one large operation.
That plan was abandoned when Geopacific Resources became involved with Kula.
WCB planned to merge with Queensland-focused gold explorer GBM Resources earlier this year, but that deal was scrapped in March when GBM was unable to obtain funding.
Kingston shares jumped by 21% to 1.7c.
