Classic Minerals signs Kat Gap toll treatment deal with Barto Gold
At Kat Gap, Classic Minerals has mined 6,504t of ore at 4.82g/t gold to produce 1,011oz gold.
Aspiring producer Classic Minerals (ASX: CLZ) has signed an agreement with Barto Gold Mining for the toll treatment of ore from the Kat Gap project in Western Australia.
Barto owns the Southern Cross gold operation near Marvel Loch, approximately 120 kilometres from Kat Gap.
The milling side of the operation is managed by Minjar Gold and is capable of processing 1 million tonnes per annum, with associated infrastructure in place.
The toll milling agreement provides a processing solution for Kat Gap while Classic awaits final approvals to use its onsite Gekko plant.
Project funding
It follows Classic’s signing last month with Perth-based company Goldvalley Brown Stone for the provision of up to $10 million in unsecured and non-recourse funding to extract and process Kat Gap ore.
Under the terms of the funding, Goldvalley agreed to enter a binding deal with the owner of a gold mill to toll treat ore from Kat Gap.
Today’s agreement with Barto brings Classic one step closer to signing a formal agreement with Goldvalley.
Mining and logistics
Classic and Goldvalley have been working towards finalising mining and logistics to extract up to 50,000 ounces from the Kat Gap deposit.
The companies are focused on an optimal mining process which will ensure costs are kept low and manageable.
Net profits from gold production will be shared between Classic and GoldValley in a 70:30 split.
Low-cost approach
Classic chairman John Lester said the toll treatment of ore and proposed profit share arrangement continues the company’s low-cost approach to gold production at Kat Gap while providing certainty for the project.
“We are determined to keep costs down while not diminishing our ownership of this project,” he said.
“We have been working closely with Goldvalley and this new toll processing deal with Barto moves us closer to production.”
Unmined deposit
Kat Gap contains a shallow unmined gold deposit, which was discovered in the 1990s and was the subject of a scoping study in 2003 by Sons of Gwalia, which was the third largest gold producer in Australia at the time until its collapse the following year.
Classic has previously described the mineralisation at Kat Gap as “impressive with exceptional shallow high-grade gold”.
The project’s current resource stands at 93,000oz of contained gold.