Kingston Resources Unlocks $50 Million from Sale of Misima Gold Mine to Ok Tedi
Papua New Guinea mining stalwart Kingston Resources (ASX: KSN) has added $50 million to its bank balance after receiving the initial payment from Ok Tedi Mining for the sale of the historical Misima gold mine.
Part of a total $95m transaction, Ok Tedi made the payment following Kingston agreeing to divest the Misima project earlier this year.
Kingston Resources will receive a further $10m 12 months post-completion and the same amount again payable on Ok Tedi making a positive development final investment decision for Misima.
Production Royalty Options
Kingston is also eligible to receive a 0.5% gross revenue royalty on all gold production at Misima after the first 500,000 ounces are produced.
Ok Tedi retains a $25m royalty buy-back option.
Misima, located 625 kilometres east of Port Moresby in Milne Bay, has a current mineral resource estimate of 3.8Moz of gold and 22.1Moz of silver.
20-Year Mine Life
Kingston moved to 100% ownership of the project in 2021 and completed a definitive feasibility study (DFS) of the mine that confirmed the viability of a new long-life open-pit mining operation at the site.
The DFS assumed a 20-year mine life, annual throughput capacity of 6.1Mt and life of mine average annual gold production of 122,000oz.
Ok Tedi will now proceed with refining the DFS and environmental impact studies to accelerate its development and permitting plans for the mine
Substantial Value Unlocked
Kingston managing director Andrew Corbett, said the payment positions the company as a debt free and well-funded Australian copper and gold producer.
“The completion of this sale has unlocked substantial value for our shareholders and enables us to focus squarely on growing Mineral Hill and expanding our operating footprint,” Mr Corbett said.
“Our partnership with Ok Tedi ensures that Misima is in capable hands, with the potential for a near-term development decision in a favourable gold price environment [and] Kingston retains ongoing exposure to the upside at Misima through the deferred payment and royalty structure.”