Navarre Minerals completes transformational acquisition of Mt Carlton gold mine
Around 22,180oz of gold was produced from Mt Carlton in the June quarter, with the mine expected to generate 45,000-50,000oz in the current financial year.
Navarre Minerals (ASX: NML) has transitioned to the ranks of gold producer following its acquisition of the established Mt Carlton gold mining operation, south of Townsville in Queensland.
The low-cost open pit and underground mine plus 950,000-tonnes-per-annum processing plant has instantly transformed the Stawell-based junior into a self-funded producer with a highly-prospective tenement package over 815 square kilometres.
Navarre has made a $40 million upfront payment to vendor Evolution Mining (ASX: EVN) through its subsidiary Conquest Mining Pty Ltd, comprised of $26.8 million in cash and $13.2 million in shares to give Evolution a 12.9% stake in the company.
Two additional and deferred cash payments of up to $25 million each will be payable on the achievement of quarterly gold production volumes when the average spot price in any quarter exceeds $2,250 per ounce, and from future development of the nearby Crush Creek deposit, which hosts an initial high-grade resource of 126,000 ounces of gold at 3.5 grams per tonne.
The completed transaction includes the receipt of indicative government approvals with respect to the transfer of tenements, which remain subject to regulatory documentation and stamp duty assessment and settlement.
Mt Carlton adds immediate production to Navarre’s portfolio, with forecast output of up to 50,000oz of gold in the 2021 financial year.
Navarre plans to target high-grade, near-mine ore sources to grow the inventory and extend the mine life.
Cornerstone asset
Mt Carlton is expected to become a cornerstone asset for Navarre, with identified near-mine and greenfield exploration upside to potentially underpin future mine life extension and expansion.
The operation has a JORC-compliant mineral resource of 387,000oz of gold, inclusive of 160,000oz in ore reserves based on drilling data to the end of 2020.
The mine has produced over 700,000oz of gold plus copper and silver by-product credits since commencing operations in 2013 and has a track record of safety, profitability and ore reserve replenishment.
Navarre’s economic interest in the operation started accruing from 1 October and it is forecast to deliver significant free cashflow over the first year of ownership based on current gold prices.
Transformative acquisition
Navarre managing director Ian Holland said the acquisition has been transformative for Navarre.
“We are extremely pleased to complete this transaction which move into the ranks of gold producer,” he said.
“Mt Carlton is an excellent fit for with strong production and exploration potential and we look forward to unlocking this value over the coming years.”
Core objective
Funded through a fully underwritten $36.8 million equity raising, the Mt Carlton acquisition will help achieve Navarre’s core objective of becoming a mid-tier mining company through the development and operation of large, high-grade and long-life mineral deposits.
Evolution has agreed to provide transitional support services to Navarre for the next three months to ensure a safe and smooth transition of ownership.