A timely acquisition for gold explorers

In the shadows of the consolidation speculation, rally analysis and hedging debate spotlights, smaller WA gold explorers continue to manoeuvre themselves into production positions.

In the past week, two such companies have cut a timely deal to become part of the local production scene by the end of the quarter, while a third has issued a prospectus with a view to setting up an open pit operation up to six kilometres in length.

Menzies Gold has fast-tracked plans to acquire 100 per cent of local unlisted company King Solomon Mines and its Murchison gold project, after shedding Malaysian gold interests last September and announcing an initial gradual acquisition plan in December.

Following expected shareholder approval next month, Menzies will restart production from an established Murchison project open cut site, Brandy Hill, in anticipation of first cashflow in April.

But this is just a starting point, managing director Paul Ingram said.

An established camp, office facilities, on-site processing plant and numerous prospective copper and gold tenements form part of the Murchison project, 220 kilometres east of Geraldton, and Menzies is keen to boost its resource base from projects it can process through existing facilities.

Since the December announcement Menzies has received numerous offers of prospects, but is targeting projects that would attract partnerships with larger industry players.

Major Menzies shareholder Cameco Gold operates a Kirgystan mine with annual production of 700,000 ounces.

Meanwhile, Gold Partners has big plans for another Murchison area prospect, this one 280 kilometres northeast of Perth and 74 kilometres southeast of Payne’s Find.

Gold Partners is acquiring the Mount Gibson gold project through its acquisition of Oroya Mining.

While the acquisition is not expected to be finalised until late next month, Gold Partners has effective control of the project, which includes 14 open pit mines, one underground mine, 26 resources, 16 granted mining leases and one exploration licence application.

Infrastructure includes a one million tonne per annum processing plant, grid power, borefield and pipeline, village, offices, workshops, laboratory and airstrip.

Gold Partners, to be renamed Oroya Mining, will spend $1 million on proving up the resources and a further $1.5 million to prepare the plant for production and cashflow by early next year.

Managing director Stephen Shedden said the company’s longer term plans were considerably larger, including an amalgamated open pit operation up to six kilometres in length.

The Gold Partners offer for Oroya Mining hinges on the success of a prospectus issued this week. The preferential offer, aiming to raise $5 million, with a minimum of $3.5 million, closes March 12.

Gold Partners will then issue one Gold Partners share for each Oroya Mining share and, on completion of this acquisition, will exercise Oroya’s option to acquire the Mount Gibson project. Project owner, Pacmin Mining Corporation subsidiary Oriole Resources, will retain a right to buy back a 50 per cent contributing joint venture interest.

The King Solomon purchase will see Menzies buy all King Solomon shares from its 19 shareholders, in exchange for Menzies shares and options.

In September, Menzies will pay a minimum $900,000 cash, with a further $900,000 paid in cash and/or shares.

Mr Ingram said Menzies planned to retain its 17.5 per cent investment in Sydney B-2-B company, Marketboomer.

Australian gold production fell by 5 per cent during 2001, but during that time WA companies Barra Resources and Gindalbie Gold have each moved into production.

Explorer Hamill Resources reports having plenty of good ground to investigate indepen-dently prior to considering possible production timetables and joint ventures.

Pacmin Mining Corporation was acquired by Sons of Gwalia in October last year.

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