PERTH (miningweekly.com) – ASX-listed junior KalNorth Gold Mines has inked a heads of agreement (HoA) with Aim-listed Keras Resources that could see the Lindsays project, in Western Australia, being developed.
The HoA allowed Keras an exclusive option to mine the current Joint Ore Reserves Committee-compliant resource at Lindsays through openpit and underground mining at the deposit known as Parrot Feathers.
Keras would have two months from the execution of the HoA to submit a final plan for the openpit operation, and would have to give written notice no later than one month after receiving approval from the Western Australian Department of Mines and Petroleum (DMP) for the openpit mining proposal.
Once the DMP had given its approval, Keras had two months within which to start mining.
If Keras exercised its openpit options, the company would have six months from the execution of the HoA to prepare and submit a proposal for underground mining at Parrot Feathers.
If the underground economic evaluation met a specific hurdle rate of return, Keras could proceed with the implementation of the underground proposal, subject to the receipt of the necessary approvals.
Profit from Lindsays would be split on a 51:49 basis in KalNorth’s favour, after deducting royalties, operating costs and management fees for the Keras team, if the gold price was at A$1 600/oz or less.
At a gold price of A$1 600/oz or higher, the split would be 70:30 in favour of KalNorth.
“The development agreement for Lindsays project provides KalNorth with an opportunity for exploring the project resource while minimising risk, but also assists in renewing exploration focus on high potential targets,” said KalNorth executive director Lijun Yang.
Mining at the Lindsays project was undertaken in early 2013 for a period of about six months, before work was suspended owing to a deteriorating gold price.
The project is currently estimated to host a resource of some 3.97-million tonnes, grading 1.7 g/t gold for 215 100 oz of contained gold.