PERTH (miningweekly.com) – ASX-listed Middle Island Resources on Wednesday told shareholders that it would acquire Black Oak Minerals' Sandstone gold project, in Western Australia, for A$2.5-million.
The project is estimated to host a mineral resource of some 480 000 oz of gold, with existing drilling indicating that there was significant potential to rapidly expand the resource base.
The Sandstone project also included a 600 000 t/y carbon-in-pulp processing plant, associated infrastructure and a considerable inventory of spares. The plant has been on care and maintenance since 2010, and recommissioning costs have been estimated at between A$5-million and A$8-million.
The tenements also came with a legacy 2% net smelter royalty payable to previous owner Troy Resources, along with a royalty on one of the mining tenements of A$1/t of ore mined and processed, payable to Herald and National Resources Exploration.
Middle Island MD Rick Yeates said on Wednesday that, since 2013, the company had been proactively identifying and reviewing advanced gold opportunities, primarily in Australia and Africa.
He noted that the acquisition price of the Sandstone project represented a cost of $4/resource ounce, which compared favourably with global average values for gold projects of equivalent status.
Further, the location of the project offered administrative synergies, more favourable exchange rates and a relatively lower operating cost environment, said Yeates.
Middle Island has raised A$400 000 through a share placement to provide working capital for the Sandstone acquisition, with the miner placing 40-million shares at 1c each to professional and sophisticated investors.
In addition to the share placement, Middle Island was hoping to present an entitlement offer to existing shareholders. The final structure, size and timing of this offer were yet to be determined.