PERTH (miningweekly.com) – Gold miner Evolution Mining has reached an agreement with Norton Gold Fields to terminate its rights to mine and process ore from the Castle Hill deposit, in Western Australia.

Evolution said on Wednesday that the agreement allowed the company to explore and develop an important package of tenements at its Mungari operation, that were effectively quarantined by the rights held by Norton.

The tenements are some 25 km from Evolution’s Mungari processing facility, and contains several prospective deposits and exploration target of which Castle Hill is the most advanced and most significant deposit. Castle Hill hosts a mineral resource of 19.32-million tonnes, grading 1.12 g/t gold for 695 000 oz of gold and an ore reserve of 5.35-million tonnes, grading 1.38 g/t gold for 236 000 oz.

“Full ownership of Castle Hill materially extends the mine life at Mungari and provides the flexibility to optimise the long-term future of the operation. Importantly, we now have control over the timing of development at Castle Hill,” said Evolution executive chairperson Jake Klein.

Castle Hill is now expected to provide base-load feed for the Mungari processing facility following the completion of the White Foil openpit mine in the 2020 financial year.

Evolution said that once developed, Castle Hill would be an operational hub that would provide operating synergies for several smaller nearby deposits, thereby reducing the cost to develop and mine these deposits.

The miner stated that infill drilling and engineering studies relevant to Castle Hill and the surrounding deposits would start immediately.

Meanwhile, in exchange for Norton terminating its right to mine and other historic rights, Evolution will pay Norton an initial A$12-million up-front in cash.

An additional A$3-million cash payment will be made six months after the completion of the transaction, with Norton also due a 2% net smelter royalty return over the first 38 000 oz of gold produced from certain tenements within the Castle Hill deposit area.