Photo by: Bloomberg
PERTH (miningweekly.com) – ASX-listed junior Havilah Resources has executed a contract with civil contractor Consolidated Mining & Civil (CMC) to start contract mining at its Portia gold project, in South Australia.
The contract also included funding arrangements, and would see CMC both fund and conduct mining operations at Portia, delivering the gold ore to the surface stockpiles at its own expense and risk.
Havilah subsidiary Benagerie Gold would be responsible for processing the ore and producing gold for delivery to a refiner.
“Havilah is in effect sharing a portion of the gold revenue with the mining contractor, who will fund the cost of delivering this gold ore to surface for processing,” said MD Chris Giles.
“This allows the Portia gold project to proceed without Havilah taking on onerous conventional loan terms or a significant dilution of existing shareholders as a result of issuing additional equity.”
The revenue from gold sales would be shared on a 50:50 basis, and a joint operating committee, chaired by Benagerie, would oversee the operation. Both parties would also be jointly responsible for the 1% revenue royalty payable to the previous owner of the deposit, the state government royalty and the gold refining costs.
Havilah was granted approval by the South Australian government to start mining at the Portia gold project in October last year, with the Department of State Development approving the programme for environmental protection and rehabilitation, which included a A$1.9-million mine closure rehabilitation bond.
As part of the agreement, CMC would provide a bank guarantee to Benagerie to enable it to lodge the A$1.9-million rehabilitation bond.
The mining schedule at Portia would see first gold delivered to the processing plant by June this year.
“With the mining fully funded and Havilah responsible only for processing costs, shareholders can look forward to significant returns from gold sales in 2016, which will put Havilah in a good position to advance development of its other projects, including the much larger Kalkaroo copper/gold deposit,” Giles added.