PERTH (miningweekly.com) – Junior Laneway Resources has struck a A$17-million deal to acquire the Georgetown gold project, in Queensland, some 100 km from its operating Agate Creek gold mine.

Laneway on Monday announced that it had entered into a binding share sale agreement with Masterson Minerals and its wholly owned subsidiary Kempton Minerals, which owns the Georgetown gold project.

The project includes a Joint Ore Reserves Committee- (Jorc-) compliant inferred resource of 119 000 oz, an operational carbon-in-pulp gold processing plant, an extensive portfolio of exploration and mining leases in close proximity to the plant, as well as substantial oxide ore and sulphide ore exploration potential.

“The acquisition of the Georgetown gold project provides Laneway with a unique opportunity to expand our footprint in the Etheridge Goldfields region and create substantial value for Laneway shareholders by leveraging the existing production infrastructure of Georgetown, the substantial exploration potential of its exploration and mining leases and multiple processing growth options to underpin a longer term production growth profile for Laneway,” said Laneway MD Brad Gordon.

“Processing of high-grade Agate Creek ore through the Georgetown facility will provide a substantial cash flow to Laneway and eliminate the previous reliance on third-party milling facilities cutting cash costs by up to an estimated A$100/t. Laneway envisages the resultant cash flow will also eventually fund the construction of a second mill at Agate Creek, once permitting and environmental approvals are in place, to monetise the 471 000 oz we have in oxide Jorc mineral resources there, and also fund a broader appraisal of the projects with a view to materially expanding the mineral resources.

“Given the endowment of Georgetown’s tenements and the central location of the Georgetown plant to other stranded gold resources in the region we see excellent potential for the development of a regional processing hub at Georgetown focused on sulphide resources. Laneway should thus emerge with two production centres processing oxide and sulphide ores, underpinning a strong growth profile in production,” he added.

Under the terms of the agreement, Laneway will pay an initial A$500 000 deposit, after which work programmes to restart will commence.

At the completion of the transaction, Laneway will pay a further A$7.45-million in cash and will issue 100-million of its own shares, along with 100-million options, exercisable at 1.5c each and expiring at the end of July 2023.

A final payment of A$8.5-million will be made, of which a maximum of A$2.5-million can be made in shares, with Laneway also paying the vendors a 1% net smelter royalty on gold produced at the project area, capped at A$5-million.

Laneway told shareholders that it was progressing debt funding alternatives to fund the upfront cash consideration and that the company would also now proceed with the previously announced entitlement offer equity raising which would fund the working capital requirements to commence production.