Doray announced today it would buy the remaining 20 per cent in Andy Well that it does not already own from private Kalgoorlie-based company Murchison Resources in return for $14 million in cash and shares.
The majority of consideration is deferred and relates to production milestones, Doray managing director Allan Kelly said.
A total of $4 million in cash and $2 million in shares is payable on completion of the transaction, and a further $4 million cash payment is due within 14 days of meeting an agreed production milestone, or by October 31, 2013, at the latest.
A final $4 million cash payment will be due within 14 days of the mine producing 100,000 ounces of gold.
“This purchase agreement greatly simplifies not only the current project funding process, but also the ongoing operation of this very attractive start-up project and paves the way for open pit mining to commence on schedule by the end of 2012 and first gold production in mid-2013.”
At close of trade today, Doray stocks had gained 1.4 per cent, trading at 72 cents.
A maiden high-grade reserve was unveiled at Andy Well in June, with the combined open pit and underground mining reserve standing at 570,000 tonnes of ore containing 12.8 grams of gold per tonne, for 235,000 contained ounces.
Doray gave the project the final investment go-ahead in late July.