Kingston Resources has agreed to acquire the Mineral Hill Mine in Australia from US-based Quintana in a deal valued at around A$22.7m ($17m).

Under the deal, Quintana will receive a combination of upfront cash and shares, deferred cash payments, as well as a 2% royalty over production from Kingston.

Situated 65km north of Condobolin in New South Wales, Mineral Hill Mine consists of two processing circuits, current gold production and substantial exploration upside.

With tenement package covering a total area of some 340km2 and an additional exploration tenure adjacent to the primary project area, the Mineral Hill mine includes 20 granted mining leases enclosed by a single exploration licence EL1999.

The mine, which poured the first gold in September this year, is presently boosting the production from the processing of existing tailings.

With positive free cash-flow expected in early 2022, tailing processing is anticipated to deliver gold production of 40,000oz at AISC of A$1,550 (1127)-1650 (1200)/oz over 29 months.

Kingston Resources managing director Andrew Corbett said: “The acquisition of Mineral Hill is a unique opportunity for Kingston shareholders. We are very excited to be able to acquire a fully-developed gold and copper project in a Tier-1 location that has recently restarted operations with immediate gold production.

“The attractive deal metrics, near-term cash-flow and significant gold and copper exposure make for a fantastic strategic fit with our cornerstone asset, the 3.8Moz Misima Gold Project in PNG.”

Kingston aims to complete the production ramp up of the CIL (Carbon-in-Leach) circuit for the tailings re-processing, upon the completion of the deal that is expected to occur in mid-to-late January next year.

Focusing on the Pearse open pit targets and the Southern Ore Zone (SOZ) underground targets, the exploration drilling is expected to be commenced within two months of completion.

With a projected recovery of around 61%, the Mineral Hill TSF 1 project is designed to mine and treat 1.81Mt at 1.13g/t Au tailings. It is expected to help produce around 40,000 recovered ounces of gold.