How Classic Minerals’ Drill-for-Equity Deal Could Unlock Forrestania’s Potential

Strategic Tenement Acquisition Bolsters Forrestania Project

During the June 2025 quarter, Classic Minerals Limited (ASX, CLZ) made a significant move by entering into a binding agreement to acquire a package of highly strategic tenements totaling approximately 147.68 square kilometres. These tenements, obtained from Goldbridge SL Pty Ltd, adjoin Classic’s existing gold resources at Lady Ada and Lady Magdalene within the Forrestania Gold Project in Western Australia. This acquisition expands Classic’s footprint in a historically productive gold district, potentially enhancing future exploration upside.

Progress on Exploration Permits and Innovative Drilling Financing

Following detailed data interpretation, Classic applied for ten Program of Works (PoW) licences to enable exploration drilling on the newly acquired tenements, with four already granted. To efficiently manage exploration costs, the company negotiated a drill-for-equity arrangement with Exploration Mining and Drilling Services (EMDS), a trusted Western Australian contractor. Under this flexible deal, EMDS can receive up to 90% of drilling costs in discounted Classic Minerals shares, aligning contractor incentives with shareholder value creation and reducing immediate cash outflows.

Legal Challenges Cloud Tenement Ownership

Classic Minerals is currently engaged in legal proceedings in the Supreme Court of Western Australia against Reed Exploration Pty Ltd (now Hyden Project Holdings Pty Ltd) to enforce the terms of the Forrestania tenement sale agreement. Reed Exploration claims the agreement has been terminated, but Classic remains confident of a positive outcome. Additionally, the company is involved in Wardens Court proceedings opposing forfeiture applications lodged by West Australian Prospectors Pty Ltd, asserting that expenditure commitments have been met. To safeguard its interests, Classic has lodged caveats over the disputed tenements.

Shares Suspended as ASX Compliance Efforts Continue

Classic’s shares have been suspended from trading since October 2024 due to non-lodgement of its annual report. The company lodged its audited Annual Report for FY2024 and half-year review for December 2024 in June 2025. However, the ASX has indicated that suspension will remain until Classic demonstrates full compliance with listing rules, including continuous disclosure obligations. The board and management are actively working to satisfy these requirements and secure reinstatement.

Cash Flow and Funding Position

The company reported cash outflows of A$440,000 and inflows of A$389,000 for the quarter, resulting in net operating cash use of A$411,000. Despite modest cash balances of just A$3,000 at quarter-end, Classic has access to substantial financing facilities totaling over A$24 million, with approximately A$18.6 million available. This funding runway is estimated to support operations for over 45 quarters at current expenditure levels, providing a solid financial buffer as exploration activities ramp up.

Forrestania Gold Project Resource Remains Robust

The Forrestania Gold Project continues to hold an inferred and indicated mineral resource of nearly 7 million tonnes grading 2.05 grams per tonne gold, equating to approximately 297,579 ounces. The resource base underpins Classic’s exploration and development strategy, with recent tenement acquisitions and drilling plans aimed at unlocking further value.