Excelsior Gold says a revised ore treatment agreement with Norton Gold Fields will remove an upfront $12.5 million payment for a milling allocation, with the savings to provide flexibility to further develop its Kalgoorlie North gold project.
Excelsior will use Norton’s Paddington Mill to process an initial 2.9 million dry tonnes of ore, at a maximum of 500,000 tonnes per annum, over five years and 10 months.
The mill is located just 20 kilometres from Excelsior’s Kalgoorlie North project.
Revisions to a binding term sheet executed between the two companies in June last year include the removal of an upfront $12.5 million payment to Norton for upgrades to the mill, and the removal of a 2 per cent net smelter return royalty.
The payment removals have been replaced with a fixed dollars-per-tonne processing fee over the duration of the agreement.
A treatment deadline for ore sourced from Kalgoorlie North has also been removed, providing Excelsior with flexibility to optimise its processing schedule.
Excelsior managing director David Hamlyn said the removal of the net smelter return royalty agreement provided the company with additional incentives for further exploration and resource development of Kalgoorlie North.
“The conversion of the upfront capital requirement into a fixed dollars-per-tonne charge drastically reduces our funding requirements in the early stages of development at the Kalgoorlie North project,” Mr Hamlyn said.
“Conclusion of the new agreement also allows us to turn our focus on the completion of project financing based on the new capital requirements and cost structure for our mining operations.”
Excelsior shares were unchanged at 69 cents each at 10am.
