Excelsior gets allocation at Paddington Mill

Perth exploration firm Excelsior Gold has executed a binding term sheet that will provide a guaranteed long-term milling allocation at Norton Gold Fields’ Paddington Mill.

Excelsior will use the mill to process ore from its Kalgoorlie North gold project.

The 3.5 million tonne per annum capacity Paddington Mill is located about 20 kilometres from key deposits in the project. 

Under the term sheet, Excelsior has secured an initial allocation at the mill of 2.5 million dry tonnes, with the allocation expected to be utilised at a rate of 500,000 tonnnes per annum over a period of five years.

Excelsior also has the option to extend the allocation on a yearly basis for a further five years, providing a cumulative allocation of up to 5 million tonnes.

In return, the company will contribute a portion of the capital expenditure required for a potential upgrade and refurbishment of the Paddington Mill, capped at $12.5 million.

“Securing access to a large mill such as Paddington, within very close proximity to the Kalgoorlie North gold project provides significant cost benefits to Excelsior,” said David Hamlyn, Excelsior’s managing director. 

The agreement will allow Excelsior to progress the Kalgoorlie North gold project towards production and operating cash flow, for a significantly lower capital cost and in a faster timeframe than if a standalone development was pursued. 

With the key commercial terms with Norton now agreed, Excelsior will accelerate mine development drilling and detailed mining planning, which will include re-estimation of the open pit and underground ore reserves at the Zoroastrian and the satellite deposits.

The company will also commence discussions on debt funding and the mine development costs and capital required for its share of the proposed Paddington Mill upgrade.

Mining operations are expected to initially commence from the Zoroastrian deposit, with first treatment expected in early 2016. 

Excelsior’s share price rose by 12.7 per cent to 8 cents at 12:10pm WST.