PERTH (miningweekly.com) – ASX-listed Kingston Resources has unveiled plans to become a gold producer with the acquisition of the Mineral Hill gold mine, in New South Wales, from US-based Quintana MH Holding Company.

Under the terms of the agreement, Kingston will pay a combination of upfront cash and shares, a deferred cash payment and a 2% royalty over production for a total transaction price of A$22.7-million.

A cash payment of A$1.3-million and an equity payment of A$10.7-million will be made up-front, with a deferred cash payment of A$2-million due on the production of 15 000 oz of gold, a further A$2.7-million on the production of 22 500 oz of gold, and a further A$4.7-million on the production of 30 000 oz of gold.

A further A$1.3-million will become payable on the earlier of the production of 37 500 oz of gold or December 1, 2023. Furthermore, a 2% net smelter royalty will also be placed on future mine production from Mineral Hill.

First gold was poured at Mineral Hill in September this year, and the project is currently ramping up from the processing of existing tailings, with production forecast to reach 40 000 oz at an average all-in sustaining cost of A$1 550/oz to A$1 650/oz over a 29-month period.

Production ramp-up is expected to take four months, with the project reaching its nameplate production in early 2022, with a targeted tailings throughput rate of 750 000 t/y.

Kingston told shareholders on Thursday that the tailings processing operation would provide the company with a solid foundation to unlock the broader potential of the Mineral Hill asset, with minimal capital required to access several production-ready openpit and underground deposits. These near-term production opportunities included the Pearse and Pearse North deposits, the Southern ore zone and the Parkers Hill deposit. There were also a number of advanced exploration targets across the broader tenement package.

Kingston has an exploration and development programme in place from which it intends to re-establish mine production from the existing reserve and resource base, following the completion of the tailings processing operation, in late 2023.

“The acquisition of Mineral Hill is a unique opportunity for Kingston shareholders. We are very excited to be able to acquire a fully developed gold and copper project in a tier 1 location that has recently restarted operations with immediate gold production,” said MD Andrew Corbett.

“The attractive deal metrics, near-term cash flow and significant gold and copper exposure make for a fantastic strategic fit with our cornerstone asset, the 3.8-million-ounce Misima gold project in Papua New Guinea. Misima is a large-scale, long-life and low-cost development project which, combined with the near-term production profile and extensive exploration opportunities at Mineral Hill, provides Kingston with an ideal platform for growth.”