Kingston Resources (ASX: KSN) has officially joined gold producer ranks after completing the acquisition of the Mineral Hill copper-gold mine from US-based Quintana MH Holdings.
The company has now paid US$1 million (A$1.38 million) in cash and issued more than 54.9 million shares as part of the upfront consideration for the acquisition.
A further US$8 million (A$11 million) will be paid to Quintana as Kingston reaches certain gold production milestones. Additionally, Kingston will pay a 2% net smelter royalty on any future production from the project.
“The completion of the Mineral Hill acquisition marks a significant achievement for Kingston, representing the transition from a developer to a producer and propelling the company immediately into the ranks of gold producers on the ASX,” Kingston managing director Andrew Corbett said.
The acquisition was funded from a A$14 million placement to institutional investors and a A$4 million share purchase plan to existing Kingston shareholders.
Mineral Hill gold mine
Kingston announced it was acquiring Mineral Hill in November last year for up to A$22.7 million, which comprises US$1 million in cash, US$8 million in shares and a further US$8 million in deferred payments.
The project is located in New South Wales and comes with extensive on-site infrastructure including a 400,000 tonne per annum plant and 350,000tpa flotation circuit.
Historically, production at the project focused on copper and left behind high-grade gold tailings.
Kingston plans to process the tailings to produce about 40,000 ounces of gold over 29 months.
The all-in sustaining cost is estimated at A$1,550-1,650/oz, with positive cash flow anticipated early this year.
Mr Corbett said exploration and resource drilling will also begin in parallel with the tailings reprocessing.
“Exploration at Mineral Hill is one of the key pillars underpinning our aspiration to become a leading diversified mid-tier gold and base metal producer in the Asia-Pacific region.”
“Strategically, the processing plant is ideally located within the Cobar Basin to take advantage of both internal and external near-mine opportunities.”
Misima gold project
Mr Corbett pointed out the near-term cash flow and upside at Mineral Hill was a “fantastic strategic fit” with Kingston’s Misima gold project in Papua New Guinea.
Cash flow from Mineral Hill is expected to help fund development of Misima which has 3.8Moz in gold resources.
A definitive feasibility study is underway at Misima where it is evaluating a 130,000oz per annum operation.