PERTH (miningweekly.com) – Junior Aus Tin Mining has executed a sale and purchase agreement to acquire the Granville tin project, in Tasmania.

In August this year, the company signed a nonbinding heads of agreement to acquire privately held McDermott Mining to gain ownership of the Granville project for A$1.3-million.

The agreement had been subject to the completion of a due diligence and the receipt of all necessary approvals.

Following the completion of the due diligence, Aus Tin executed the sales and purchase agreement for a revised payment of A$100 000, which would be payable within 90 days.

The balance of the consideration would comprise 50-million shares in Aus Tin, which would be subject to voluntary escrow in four equal tranches over a four-year period, the assumption or replacement of a A$250 000 overdraft facility and A$95 000 guarantee facility, and the payment of a 2% net smelter royalty on the tin produced from the third year of operation, and capped at A$550 000.

“The acquisition of the Granville tin project represents an important milestone for Aus Tin Mining, with the company positioned to become Australia’s second only ASX-listed tin producer from the first quarter of 2016,” said Aus Tin CEO Peter Williams.

“The combination of high tin grades, openpit mining and relatively simple metallurgy provide the foundation for a profitable operation at current prices and offer significant upside to an increased tin price.”

The project comprised two mining leases and the 1 000 t/y Twelve Mile processing plant. The project was placed on care and maintenance during the first half of 2015, as the owners of the project sought to secure the necessary capital to progress the expansion of the project to 50 000 t/y.

Subject to obtaining all the necessary approvals, Aus Tin was hoping to restart operations at Granville in the first quarter of next year.

A modest programme of capital works would be undertaken at the processing plant, after which plant feed would be sourced from existing stockpiles. Aus Tin would also progress the necessary approvals to expand the operation to a treatment rate of 40 000 t/y, and the restart of mining at the Granville East mine.

Meanwhile, Aus Tin had also started the approvals process for Stage 1 of its own Taronga project, in New South Wales, and was targeting the development of a trial mine and pilot processing operation during 2016, to assess various areas of upside, including the potential for a higher resource tin grade and increased tin recovery.

A 2014 prefeasibility study estimated that the project could support a 2.5-million-tonne-a-year openpit operation with a mine life of nine years.

The Stage 1 development would comprise a 330 000 t trial mine within the Northern Zone ore reserve, and a pilot processing plant.