The acquisition boosts the total resources of the company to 4.2 million ounces
The Orion pit of the Mt Gibson Gold Project. (Credit: Capricorn Metals Ltd)
Capricorn Metals has acquired the historic producing Mt Gibson Gold Project in Western Australia (WA) for AUD39.6m ($29.31m) in a cash-cum-stock deal.
Since 1999, the project has been on care and maintenance, while its processing plant was decommissioned.
Capricorn Metals said that the acquisition of the project is part of its strategy to grow into an Australia-focused multi mine gold company.
Located in the Murchison region, the Mt Gibson Gold Project has an inferred mineral resource estimate of nearly 2.1 million ounces of gold. The project had yielded over 868,000 ounces of gold between 1986 and 1999.
The acquisition of the Mt Gibson mine boosts the total resources of Capricorn Metals to 4.2 million ounces. These include the resources and 1.2 million ounce ore reserve at the company’s operating Karlawinda Gold Mine.
Capricorn Metals executive chairman Mark Clark said: “The purchase of the Mt Gibson Gold Project is an outstanding opportunity for Capricorn to grow beyond the now operational Karlawinda project. The project has a proven gold endowment, is located in the world class mining jurisdiction of WA and has been subject to very limited modern exploration.
“There is every reason to be optimistic about the opportunity with last gold production over 30 years ago from very shallow open pits when the gold price was around AUD450 per ounce.”
The company acquired the Mt Gibson Gold Project through two separate binding agreements.
Through a deal with Avenger Projects, the company acquired Crimson Metals, which holds applications for exploration and prospecting licenses over the majority of the project area.
In another deal, the company has acquired the various mining tenure, mining information, and infrastructure and improvements owned by Extension Hill.
The consideration comprises AUD25.6m ($18.95m) cash payment plus issuance of AUD14m ($10.36m) worth shares to Avenger, which represents a stake of 2.1% in the company.
Additionally, Avenger has been granted a net smelter royalty of 1% on all minerals produced from the Mt Gibson Gold Project, which includes gold production in excess of 90,000 ounces.
Capricorn Metals said that alongside drilling work, it will begin the technical and environmental studies needed for supporting a reserve estimate and feasibility study on the gold project in due course.