PERTH (miningweekly.com) – South African miner Harmony Gold has sold its mothballed Mount Magnet project, in Western Australia, to Ramelius Resources for A$40-million.

Harmony put the historic Mount Magnet project back up for sale in 2008, after a deal with Australian junior miner Monarch Gold collapsed.

The mine was discovered in 1891 and produced 5,6-million ounces of gold over more than a century. It was placed on care-and-maintenance in December 2007.

“The acquisition of the Mount Magnet gold project fulfils Ramelius’ stated strategy of acquiring an advanced gold project that has upside potential,” said Ramelius CEO Ian Gordon stated.

Harmony has delineated 3,3-million ounces of resource for the project, and over the past 12 months, it has completed a detailed feasibility study, which demonstrated the robust financial returns at current gold prices.

Gordon said that the feasibility study had forecasted production of around 474 000 oz of gold from openpit operations, over four-and–a-half years, at an operating cost of A$825/oz.

Harmony also optimised numerous other satellite openpits, which could potentially add a further 200 000 oz of gold to production.

“Ramelius believes that the project can be further optimised as there is potential to increase reserves through further drilling and consideration of the underground resources,” said Gordon.

No underground resources were included in the completed feasibility study.

Gordon said that the company would now look to conduct a major drilling programme at Mount Magnet, before restarting production, to increase the projects Joint Ore Reserves Committee-compliant resource position.

The company would also test the underground resource potential below the current pits and extend the regional exploration to target other areas where gold deposits could exist.

Harmony Gold CEO Graham Briggs said that the mine was seen as noncore to its strategy and that the divestment allowed the group to focus on growing its operating portfolio in Papua New Guinea.

"The sale of Mount Magnet is a continuation of our asset optimisation strategy," he stated.

The ASX-listed Ramelius would pay A$35,3-million in cash, as well as A$4,7-million worth of replacement bonds, which it would fund from existing cash reserves.

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