TORONTO (miningweekly.com) – Low-cost Malaysia-focused gold producer Monument Mining on Tuesday said that it had agreed to buy the Murchison gold project from a group of Australia-based companies for A$15-million in cash, which opened the door for the company to expand its operations base.

TSX-V-listed Monument said it had entered into a binding mining property sale deed with a group of companies including Jinka Minerals, Kentor Minerals and KGL Resources.

Under the deal, its wholly owned Australian subsidiary, Monument Murchison, would also receive a number of mining and exploration tenements and lease applications covering about 98 km² prospective lands for resource extension.

The tenement package held a historical resource estimate of 546 000 oz of gold, a fully operational gold processing plant, a newly developed camp site and all necessary infrastructure.

Monument said that without distraction from its present operational programme in Malaysia, it would move quickly to get this project into production.

The transaction was subject to Australian Foreign Investment Review Board approval, the usual conditions to close a transaction of this type and any required regulatory approvals.

Monument believed that the present mining industry downturn introduced opportunities to acquire additional resources at lower costs.

The company pointed out that the Murchison project was an example of such a prospective project at an advanced, near-production stage.

The project is located in the Murchison mineral field, about 765 km north of Perth, in a highly prospective historical gold province within the Murchison district of Western Australia. The Murchison mineral field had been explored since the 1900s and contained a number of currently operating gold projects.

Former owners, including Homestake Australia and, subsequently, Barrick Gold Australia, had produced 150 000 oz of gold from the immediate region up to the late 1990s but shut down operations when gold was trading at a much lower price.

The properties held an Australasian Joint Ore Reserves Committee-compliant historical resource as at October 2013 of 6.41-million tonnes at an average grade of 2.7 g/t containing 546 000 oz of gold within a number of previously operated openpits, with the added potential for an underground operation.

NEXT STEPS

Monument said it would aim to start production from a heap leach operation as its first priority, processing ore from potentially both the Burnakura and Gabanintha locations within the project. Preliminary engineering for a two-million-tonne pad had been carried out and draft operating permits had been prepared in anticipation of filing applications with regulators.

The company had also acquired an additional crushing plant to allow for up to three-stage crushing, a mixer, an agglomerator and a stacker to enable stacking of material onto the pad. It was planned that the production pad would be located near the present infrastructure at Burnakura.

Metallurgical testwork data reviewed by independent metallurgical and engineering consultants during the company's due diligence review indicated that material from only one of the pits required pre-stacking agglomeration.

The mine also has a completely equipped assay laboratory that would facilitate assays and heap leach results simulations through metallurgical testwork programmes, which would be carried out on site, subsequent to testwork confirmation programmes by independent consultants. The independent testwork programme was intended to produce recovery curves, reagent usage and other data for production estimates and financial forecasts.

Concurrent with a review of this work, a drill programme would be undertaken to confirm grades, and would attempt to upgrade and increase the resource and provide data and material for the metallurgical testwork programme.

This would also facilitate mine planning and ore delivery schedules, once all infill drilling and other technical work had been completed.