24/07/2014 - 14:58

Mungana finalises $15m Kagara asset buy

24/07/2014 - 14:58

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Shares in Mungana Gold Mines rose by more than 25 per cent after the company announced it would move ahead with its North Queensland zinc strategy, following shareholder support for the $15 million acquisition of the Chilagoe base metal assets from the liquidators of Kagara, originally announced in December last year.

Mungana finalises $15m Kagara asset buy

Shares in Mungana Goldmines rose by more than 25 per cent after the company announced it would move ahead with its North Queensland zinc strategy, following shareholder support for the $15 million acquisition of the Chilagoe base metal assets from the liquidators of Kagara, originally announced in December last year.

“The acquisition puts Mungana on track to become a significant new player in the Australian zinc industry over the next few years,” Mungana said in a statement.

Located 210 kilometres west of Cairns, the acquisition of the Chilagoe assets also includes the King Vol project, one of Australia’s highest grade undeveloped zinc deposits.

Mungana said King Vol had the potential to underpin a significant new zinc development due to its high grade, combined with near-mine and regional growth potential, exploration upside and a low-cost pathway to production.

The $15 million consideration will be paid through the issue of two convertible notes worth $7.5 million each, with the first note automatically convertible at 10 cents per share.

In addition to King Vol, Mungana will hold direct ownership of the Red Dome and Mungana deposits, which has a JORC resource of 2.7 million ounces of gold, 273,000 tonnes of copper and 34 million ounces of silver. 

“This is a transformational deal for Mungana, positioning us with outstanding, high-grade, high quality assets in the zinc-copper space, with the added bonus of having a large gold-copper asset at Red Dome,” Mungana chairman Joe Treacy said. 

“We are looking forward to hitting the ground running, with exploration programs set to commence at King Vol within four to six weeks. 

“Our objective is to advance this deposit towards development as quickly as we can to take advantage of the outstanding market fundamentals for Zinc.” 

Mungana shares last traded at 17 cents at 2:50pm. 

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