PERTH (miningweekly.com) – The share price of ASX-listed Mantle Mining rose 150% on Friday on news that the company had reached an agreement with the deed administrators of fellow-listed Morning Star Gold to acquire a 95% interest in the company.

Administrators were appointed to Morning Star Gold in November 2014 and have since sought expressions of interest in both the business and its assets, which include the Morning Star underground gold mine, in eastern Victoria.

The mine was, in 2008, estimated to have a mineral resource of 910 000 oz, including 726 000 oz at 11.2 g/t gold and had a new processing plant and paste backfill facility on site, with the mine itself being dewatered and refurbished to 9 level.

Mantle MD Ian Kraemer said on Friday that acquiring Morning Star was a significant step for Mantle’s future as an emerging gold producer.

“Mantle’s Norton gold mine is considered to be of a scale to leverage Mantle into development of Morning Star. Morning Star is of a scale to potentially deliver significant value to shareholders. The acquisition brings a modern processing plant into Mantle’s fold in a location central to other historically and current operating gold mines that suffer from a lack of infrastructure.”

Kraemer said gold at the Morning Star mine, and the surrounding mines, was traditionally free milling, allowing for production of a high-grade concentrate from simple gravity processing.

He added that the company has started work to review all site assets, operations and data. Priorities include the physical assets, mineral resource calculations, mine and environmental management plans, metallurgical testwork and process design parameters. A revised work programme would be developed to restart operations and address any issues identified in the detailed review.

Under the terms of the transaction, Mantle would make a cash payment of A$750 000 to acquire the 95% shareholding in Morning Star Gold. The company would also have obligations to pay or procure a further A$3-million in staged payments, over the next one-and-a-half years, to Morning Star Gold’s secured creditor.

Mantle has made a A$100 000 nonrefundable deposit payment to Morning Star Gold’s creditor and would await Morning Star Gold shareholders’ approval of the transaction before making further payments.

Besides the A$3-million in cash, the secured creditor would also be granted a 1% gross sale royalty over the first five years of production from Morning Star Gold’s assets in consideration for Mantle acquiring Morning Star Gold shares from the secured creditor.

The company said on Friday that it was now reviewing the merits of recapitalising Morning Star Gold and seeking a reinstatement of the company’s share trading on the ASX, or carrying Morning Star Gold as a 95%-held subsidiary, or a combination of the two strategies to bring the Morning Star mine back into production.

Mantle shares were trading at a high of 0.9c a share, up from the closing price of 0.6c a share on August 11.