PERTH (miningweekly.com) – The Lorena gold mine, in Queensland, has been slated for development after ASX-listed juniors BCD Resources and Malachite Resources signed a formal joint venture (JV) agreement on the project.

The JV partners identified the possibility of a joint development of the Lorena project in November last year.

The partners said the signing of the formal documentation kept on track the target to start production before the end of this year, subject to the necessary statutory approvals.

BCD would act as the manager of the JV and would be responsible for all development, operating and management functions. The JV would operate on the existing granted mining leases held by Malachite and would apply to all opencut and underground resources within the mining lease area.

To earn its initial equal share, BCD would sole fund the development of the project to the point of commercial production, including the construction and commissioning of a flotation facility capable of processing some 120 000 t/y of ore, as well as all related infrastructure by the end of 2013.

Initially, net proceeds from the operation would be shared on a 50:50 basis and, once production exceeded 80 000 oz/y of saleable gold equivalent, Malachite’s share of proceeds would increase to 65%. When the 120 000 oz/y mark was reached Malachite and BCD would share the product on a 75:25 basis, favouring Malachite.

BCD said on Monday that it had completed project engineering studies for the installation of a 150 000 t/y flotation production facility at Lorena, capable of producing some 50 000 oz of contained gold over an initial 16-month processing period.

This work has confirmed the robust project economics of the Stage 1 opencut Lorena projects, the companies said in a joint statement.

Based on the work to date, and prior to final detailed engineering drawings and pit optimisation work, the cash operating costs were expected to be in the range of A$800/oz and A$900/oz.

Further, both companies have expressed their belief that there were considerable regional opportunities once the Lorena plant was in operation.

Following the Stage 1 opencut development, operations were expected to continue based on potential expansions of the current resource at depth, as well as potential new resources from surrounding prospects, and the toll treatment of third-party ores.