Kin Mining purchases NSR over Cardinia’s initial gold production to maximise value
Kin Mining managing director Andrew Munckton says the US$600,000 royalty purchase will maximise the value of Cardinia.
Kin Mining (ASX: KIN) has enhanced the economics of its wholly-owned Cardinia gold project in Western Australia after agreeing to purchase a 1.5% net smelter royalty for US$600,000 (A$772,700) over the first 100,000 ounces of gold produced from the project.
Sprott Private Resource Lending holds the 1.5% royalty, which was put in place as part of a US$27 million (A$35 million) financing agreement in 2017 under the original development plan for the project.
Kin says the US$600,000 purchase price is equivalent to $0.22 in the dollar face value of the NSR based on the current spot gold price of US$1,912 per ounce (A$2,467/oz).
Managing director Andrew Munckton said the NSR purchase was an “important step” for the company in advancing Cardinia – ensuring Kin “maximises the value of the project” for its shareholders.
Mr Munckton noted the purchase price was a “good result” with the gold price currently at near all-time highs.
“The purchase enhances the project economics by increasing the margin on the first 100,000oz of gold production.”
“Plus, the transaction has a number of benefits for Kin in terms of our development and growth as a company.”
He added the purchase also removed a security held by third parties over key mining tenure linked to the royalty.
“And, finally, it streamlines and enhances our future development, financing and transaction ability by simplifying the structure and reducing future administrative costs.”
Cardinia gold project
Cardinia is in WA’s north-eastern goldfields and hosts more than 45km of strike.
Last month, Kin revealed an updated resource for the Cardinia project that totals 30 million tonnes at 1.28 grams per tonne gold for 1.23Moz ounce of contained metal.
The upgrade marked a 7% increase in contained ounces and a 15% rise in measured and indicated resources – boosting confidence.
Kin expects to release further resource upgrades in the September quarter, with recent drilling returning “outstanding” results.
During the March quarter, Kin completed a $12.8 million capital raising to fund exploration and development at Cardinia.