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A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
RNC Minerals (TSX: RNX) has entered an A$50 million purchase option agreement with Westgold Resources (ASX: WGX) to buy Westgold’s Higginsville Gold Operation in Western Australia’s Kalgoorlie region.
RNC will pay A$4 million in shares for an exclusive 40-day due diligence period. If it exercises its option, the deal would close 30 days later and RNC would pay Westgold a further A$21 million in shares and A$25 million in cash.
Higginsville comes with a 1.3 million tonnes per year gold mill that RNC believes would help the company save 35%, or in excess of $15 per tonne, on processing costs at its nearby Beta Hunt nickel-gold mine while adding 40,000 to 45,000 oz. gold production in 2019. RNC achieved 94% gold recovery tolling Beta Hunt material at Higginsville in 2018.
Higginsville contains 5.9 million proven and probable tonnes grading 1.92 grams gold per tonne for 367,000 oz. gold. Inclusive of reserves, it contains 3.1 million measured tonnes grading 2.2 grams gold for 220,000 oz. gold, 15.9 million indicated tonnes grading 1.99 gram gold for 1.02 million oz. gold and 10.6 million inferred tonnes at 1.99 gram gold for 682,000 oz. gold.
The property contains several operating underground and open pit mines. Westgold primarily mines the Mt. Henry open pit, and expects to produce as much as 45,000 oz. gold in 2019 at $1,000 to $1,050 per oz. all-in sustaining costs.
(This article first appeared in The Northern Miner)
