Monarch Resources Ltd has reached agreement to acquire the Minjar Gold Project in Western Australia from Gindalbie Metals Ltd for a staged total of $10 million over 12 months.
Monarch Resources Ltd has reached agreement to acquire the Minjar Gold Project in Western Australia from Gindalbie Metals Ltd for a staged total of $10 million over 12 months.
The terms of the acquisition include a $2.5 million cash payment on settlement of the transaction, a further $2.5 million 6 months after settlement, and $5 million 12 months after settlement, payable either in cash or Monarch shares or a combination of both. The acquisition excludes the iron ore rights to the Minjar ground, which will be retained by Gindalbie.
Monarch's Chairman, Michael Kiernan, said the acquisition represented a significant growth step, opening up a new strategic front for the Company as the basis for a potential second gold exploration and production centre, consistent with our objective to build the Company into a substantial Australian gold company.
"The acquisition includes a substantial resource base, an existing treatment facility offering the potential to re-commence production in the near term, and a highly prospective tenement package," he added. Monarch has already identified numerous targets during due diligence and proposes to commence drilling as soon as possible.
"Our focus at Minjar will be to adopt a similar strategy to that currently being pursued at Davyhurst/Siberia, namely to re-evaluate existing resources and commence exploration targeting additional ore feed for the mill, with a view to re-commencing production as soon as possible," he added.
The Minjar Project, located 500km north-east of Perth, was originally acquired by Gindalbie from Normandy Mining Ltd in 1999, and was subsequently developed and commissioned in 2001, producing 122,000 ounces of gold through until 2004. Gindalbie placed the Minjar treatment plant on care and maintenance in June 2004 due to its growing focus on its Karara iron ore assets in the Mid West region.
The acquisition includes a resource inventory of 5.175 million tonnes at 2.44g/t gold for 406,791 ounces of gold, the fully permitted 600,000tpa Minjar gold treatment facility and associated infrastructure including camp and access roads. An Infrastructure Agreement is also in place with Oxiana's nearby Golden Grove Operations, providing the opportunity for significant savings in operating costs for a re-commissioned operation.
In June 2004, Gindalbie quoted JORC compliant reserves for the project of 16,300 ounces at a gold price of A$512-535/ounce. More recent resource optimisations at a gold price of A$700/ounce indicate potentially recoverable resources of 146,000 ounces which would generate a cash flow of some A$23 million (using June 2004 costs).
Monarch recently announced a strategic review of a number of existing resources within the 2 million ounce resource inventory at the Davyhurst/Siberia Project, together with the commencement of exploration drilling at key deposits.
The Company has previously announced a share purchase plan offer, which closes on 12 April 2006 (with the directors having the right to place any shortfall). This is expected to raise additional funds which will be used to underpin Monarch's exploration and acquisition objectives.
