Norton tightens grip on Kalgoorlie Mining

China-backed Norton Gold Fields has just about wrapped up its all-scrip takeover of Kalgoorlie Mining Company, declaring its bid is now free from all conditions.

Norton, which is 89 per cent owned by Chinese gold miner Zijin Mining Group, announced today it had received acceptances representing 85.85 per cent of KMC’s stock and 55.5 per cent of its options.

The gold miner will compulsorily acquire the remainder of the shares if it receives acceptances representing more than 90 per cent of KMC.

Norton launched the offer of 0.054 shares and 0.054 options for each KMC share in April.

KMC’s key asset is the Bullant gold project, located 65 kilometres north-west of Kalgoorlie-Boulder and in close proximity to Norton’s Paddington operation.

The Bullant project, which was put into mothballs by KMC earlier this year, contains a total mineral resource of 431,000 ounces of gold and a reserve of 40,366oz.

Norton chief executive Dianmin Chen told Business News that, assuming the company takes control of the asset, Norton would evaluate the possiblity of re-starting operations at Bullant through a comprehensive exploration and development program.

"Given the low reserve number at this stage, our plan would be to invest in the mine and increase the mineral reserve and resource," Mr Chen said.

He said Norton would take the next 12 months to form a solid plan for returning the Bullant mine to production in the medium to long term.

Norton’s offer received approval from the Foreign Investment Review Board earlier this week.

The likely completion of the takeover bid comes just over two months after Norton opened its $40 million Enterprise baseload gold mine on the outskirts of Kalgoorlie.

Norton provided an output update to the market yesterday, saying it expected to increase production by 9 per cent over previous forecasts, to between 163,000 and 167,000oz of gold.

Cash costs would come in between $970/oz and $1,010/oz, Norton said.

Over the previous corresponding year, Norton produced 150,065oz at a cash cost of $1,140/oz.

Mr Chen said yesterday the production guidance reflected the company’s continued confidence in achieving challenging targets and its disciplined approach to driving costs down.

Norton’s stock was steady at 14.5 cents at 11:19AM, WST, having been lightly traded.