Evolution Mining has entered into agreement with Norton Gold Fields for the termination of Norton’s right to mine and process ore from the Castle Hill god deposit.
The agreement will also lead to termination of Norton’s other historic rights held over some Evolution tenements near Mungari in Western Australia. The historic rights include royalties, clawback rights and options to treat or purchase ore from certain tenements.
The tenements are located nearly 25km northwest of Evolution’s Mungari processing facility.
Evolution said that the transaction enables it to explore and develop an important package of tenements at Mungari.
Among the tenements, which contain several prospective deposits and exploration targets, Castle Hill is said to be an advanced and significant deposit.
Evolution’s executive chairman Jake Klein said: “Full ownership of Castle Hill materially extends the mine life at Mungari and provides the flexibility to optimise the long-term future of the operation. Importantly, we now have control over the timing of development at Castle Hill.”
According to the company, Castle Hill holds a mineral resource of 19.32 million tonnes grading 1.12g/t Au for 695,000 ounces of gold and an ore reserve of 5.35 million tonnes grading 1.38g/t Au for 236,000 ounces.
The transaction is expected to materially extend the mine life at Mungari.
Evolution said: “Castle Hill is now expected to provide base-load feed for the Mungari processing facility following forecast completion of the White Foil open-pit in FY20.
“Importantly, once developed, Castle Hill will be an operational hub that will provide operating synergies for several smaller nearby deposits and thereby reduce the cost to develop and mine these deposits. Infill drilling and engineering studies relevant to Castle Hill and the surrounding deposits will commence immediately.”
For terminating its right to mine and other historic rights, Norton will receive an initial upfront cash payment of $8.8m from Norton.