St Barbara buys Sons of Gwalia

West Perth-based St Barbara Mines has bought the gold division of failed gold and tantalum miner Sons of Gwalia for $38 million.

Once a significant Australian gold mining operation, Sons of Gwalia went into administration last August when it collapsed under debts of more than $800 million. 

Under the terms of the deal St Barbara will pay $2 million to Sons of Gwalia for the Leonora, Southern Cross and South Laverton operations and secure environmental and performance bonds worth $35.7 million.

St Barbara’s major shareholder, Resource Capital Fund, has agreed to provide $40 million of credit facilities.

St Barbara said the land bank it is buying included four processing plants and mineral reserves of 850,000 ounces.

Sons of Gwalia’s gold reserves were last reported at 3.27 million ounces, while its annual production was around 500,000 ounces.

St Barbara said the Southern Cross and South Laverton operations were forecast to produce 150,000 ounces at a cost of $450 per ounce by the end of 2005, after which they would be reviewed.

St Barbara also announced a $5 million nickel and gold exploration budget to explore the ground associated with the gold division.

The deal has been approved by Committee of Creditors of Sons of Gwalia.