New owner for beleaguered gold project

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 28 Jan 2014   Posted by admin


FOLLOWING months of uncertainty surrounding the future of the Bronzewing gold project, Metaliko Resources has entered an agreement to acquire the project from the administrator of Navigator Resources.
Metaliko entered a $4.82 million deal to purchase all of the shares in Navigator Bronzewing – a wholly-owned subsidiary of Navigator Resources – resulting in 100 per cent ownership of the Bronzewing project in the south Yandal gold belt of WA.
Navigator produced gold from the project until May 2013, when the operations were put under care and maintenance.
Navigator began reporting financial troubles early in 2013, with ongoing high project costs said to be plaguing the project.
Below forecast gold production from Bronzewing, as a result of processing issues throughout the December quarter, resulted in an operating cash flow of negative $5.8 million for the month of January. The company was unable to secure the additional funding to
continue operations and, in March 2013, voluntarily appointed an administrator.
As part of the acquisition, Metaliko would be required to arrange the release of $7.08 million of bank deposits previously lodged by Navigator Resources to cover the Department of Mines and Petroleum environmental bonds.
The deal was conditional on Metaliko securing funding to complete the purchase, and it intended to undertake a rights issue to raise $6.9 million for the acquisition costs and working capital.
According to ABC Rural, Metaliko’s acquisition marked the third time in four years that Bronzewing had changed ownership.
However Metaliko executive director Michael Ruane told ABC Rural that he believed the company could cut costs and turn the troubled project around, returning it to production within 12 months.
Acknowledging that “nothing is without risk”, Mr Ruane said he was conscious of not rushing things and would approach the project “without panic” in an attempt to avoid the issues that affected the previous two project operators.
“The flip side is if the gold price went up, went back up to $1500 [per ounce] which is not greatly above what it is [currently], this could turn out quite lucrative for the Metaliko shareholders,” he said.
“The risk you take here is you’ve paid $5 million for an asset that we say would cost $80-$100 million to replace.
“The risk is that the gold price will continue to retreat in Australian dollars terms and that you are not able to establish gold grades, or resources with grades above 2 grams of more.
“But we don’t intend to go into production unless we’ve got resources that will fit the bill.” Metaliko intended for the mine, which has produced 10 million ounces of gold in the last 20 years, to eventually employ 150 people. The project’s infrastructure includes a
2.3 million tonne per annum gold processing plant, airstrip, power station, workshops, offices, assay laboratory and a 280-person accommodation village.
“Subject to successful completion of the transaction, [Metaliko] intends to proceed immediately with drilling of the many prospective gold targets within the project tenements, some of which were outlined over 10 years ago,” the company stated.
“The company aims to establish gold resources of sufficient grade for economical mining at current gold prices and recommence mining as soon as practicable.”