PERTH (miningweekly.com) – ASX-listed Kingston Resources has completed the acquisition of the Mineral Hill mine, in New South Wales, marking its transition into the ranks of Australian gold producers.
The company in November last year struck an agreement with US-based Quintana MH Holding Company to acquire the mine for A$22.7-million, which will be paid through a combination of upfront cash and shares, a deferred cash payment and a 2% royalty over production.
Kingston has now paid $1-million in cash and issued more than 54.9-million shares to Quintana in settlement of the upfront consideration under the purchase agreement. Further deferred consideration includes a 2% net smelter royalty on future production from the project area. Additionally, deferred payments of up to $8-million are due upon reaching certain gold production milestones from the tailings project.
Kingston has funded the transaction through a A$14.0-million placement and ongoing share purchase plan, which will close at the end of January.
Kingston told shareholders on Tuesday that through this acquisition, the company has become a producing mining company with a diversified asset base in the Asia-Pacific region that also includes the 3.8-million-ounce Misima gold project in Papua New Guinea (PNG), where a definitive feasibility study is due in the first quarter of this year.
“The completion of the Mineral Hill acquisition marks a significant achievement for Kingston Resources, representing the transition from a developer to a producer and propelling the company immediately into the ranks of gold producers on the ASX,” said Kingston MD Andrew Corbett.
Mineral Hill is currently ramping up production from the processing of existing tailings with full production rates targeted to be reached during the first quarter of 2022.
The tailings processing operation will provide a foundation for Kingston to unlock the broader potential of the Mineral Hill asset, with minimal capital required to access several production-ready openpit and underground deposits. These initial production opportunities include the Pearse and Pearse North deposits, the Southern Ore Zone, Jacks Hut and the Parkers Hill deposit.
In addition, there are a number of advanced exploration targets across the broader tenement package which the company intends to pursue aggressively.
“The focus of activities post-completion includes the ramp-up of the tailings reprocessing project in parallel with the restart of exploration and resource drilling. Exploration at Mineral Hill is one of the key pillars underpinning our aspiration to become a leading diversified midtier gold and base metal producer in the Asia-Pacific region,” said Corbett.
“Strategically, the processing plant is ideally located within the Cobar basin to take advantage of both internal and external near-mine opportunities. Plus, the near-term cash-flow and significant gold and copper exposure make for a fantastic strategic fit with our cornerstone development asset, the 3.8-million-ounce Misima gold project in PNG.”