Kingston Resources (ASX: KSN) is now moving ahead to become a gold producer after receiving the first $3.5 million for the sale of its long held Western Australian Livingston gold project.
Kingston, which also has its flagship Misima gold project in Papua New Guinea, last month revealed it is buying the central New South Wales Mineral Hill mine for $22.7 million in cash and shares from US-based Quintana MH Holding, a move which will lift the company into the ranks of gold producer next year.
In the longer term, the potential $10 million (including milestone payments) it will receive for its offloaded property will enable Kingston to progress the re-opening of Misima and its 3.6 million ounce gold resource
As for the sale of its Livingstone exploration project, Kingston reports that it has now received the upfront payment from Metal Bank (ASX: MBK) of $2.5 million in cash and $1 million in Metal Bank shares.
Kingston is retaining exposure to the west Australian project through its shares and options in Metal Bank.
More cash payments as gold resource grows
The company is entitled to another $6.5 million if three milestones are achieve including identification of a 100,000oz JORC resource, then 250,000oz and finally 500,000oz
The Kingsley gold deposit within Livingstone was discovered by Kingston in 2018 after completing aircore drilling over part of the deposit.
A further 50-hole drilling program in 2020 defined zones of high- grade gold within broader zones of shallow mineralisation, showing continuity over 1km strike length.
Meanwhile, Kingston is financing the Mineral Hill deal with a $14 million placement and a $4 million share purchase plan.
Mineral Hill has a long production history but retains what the company describes as an “extensive” gold and copper resource.
Free cash flow at new mine by early 2022
Kingston said last month that tailings processing at Mineral Hill is forecast to deliver 40,000oz over 29 months, at an all-in sustaining cost of between A$1,550 per ounce and A$1,650/oz.
The company says the tailings processing operation and its expected free cash flow by early 2022 will allow Kingston to unlock the broader potential at Mineral Hill.
It will require only minimal capital to access several production-ready open pit and underground deposits.
Mineral Hill is located 65km north of Condobolin and covers 20 granted mining leases within a single exploration licence.
The area was first explored in 1894 and Mineral Hill has been operating sporadically since then.
It was explored most recently in 2008 by the former Kimberley Metals which mined one open pit and two underground zones.
Kingston says that, in addition to gold, the project offers exposure to copper, zinc, lead and silver.