Kingston Resources upgrades to gold producer status with Mineral Hill Mine acquisition
Kingston Resources is acquiring the Mineral Hill Mine gold and copper mine in NSW for $22.7 million.
It’s been a busy three weeks for Kingston Resources (ASX: KSN), which has sold a Western Australian gold project and now acquired a producing operation in New South Wales.
The company is buying the central NSW Mineral Hill mine for $22.7 million in cash and shares from US-based Quintana MH Holding.
Kingston is financing the 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.
Tailings processing to deliver 40,000oz of gold
At present, tailings are being processed at the mine site.
Kingston says tailings processing 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 anticipates 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.
“The mine re-opening will provide local employment and business opportunities for the surrounding townships within the Lachlan Shire.”
Mineral Hill is located 65km north of Condobolin.
Mine purchase bolsters company as it develops Misima resource
The acquisition comes just three weeks after Kingston sold its 75% stake in the Livingstone gold project in Western Australia for almost $10 million to Metal Bank (ASX: MBK), with Kingston retaining exposure through holding shares and options in Metal Bank.
The NSW purchase buoys Kingston’s objective of becoming what it calls a “substantial gold producer in the Asia-Pacific region”.
It will now be producing gold while advancing the re-opening of its flagship project, the mothballed Misima mine in Papua New Guinea which retains a 3.8 million ounce gold resource.
‘Advanced’ brownfield targets to be explored
Managing director Andrew Corbett said the Mineral Hill deal was attractive for its metrics, near-term cash flow and significant gold and copper exposure.
“Mineral Hill has a strong history of high-grade gold and copper production, a number of advanced brownfields exploration targets, an existing resource base and infrastructure which is expected to enable a low capital-intensity restart,” he added.
Mineral Hill 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.