Canada-based Karora Resources is poised to acquire the operating, fully permitted one million tones per annum Lakewood Mill gold processing facility located near Kalgoorlie, Western Australia, about 60 kilometres from its Beta Hunt Mine.
The price of $80 million is comprised of $70 million in cash and $10 million in Karora shares. Karora successfully tolled Beta Hunt material through the Lakewood mill in Q1 2022, achieving 94 per cent gold recovery.
The transaction is subject to, among other conditions, satisfactory completion by Karora of its due diligence, Toronto Stock Exchange approval and Australian regulatory approval.
Karora chairman Paul Andre Huet said the Lakewood Mill purchase would be a transformational step forward for the company, similar to the Higginsville mill acquisition in June 2019.
“Not only is the Lakewood mill closer to Beta Hunt than Higginsville, but the acquisition would provide several immediate strategic and operating benefits to Karora,” he said.
“First and foremost, it is anticipated that the acquisition would immediately de-risk our growth plan to increase gold production to between 185,000 and 205,000 ounces by 2024, by eliminating the procurement, schedule and construction risks associated with a major expansion of Karora’s Higginsville mill.
“In the current highly inflationary capital environment, which is negatively impacting many of our peers, we expect that this acquisition would take that risk completely off the table. We would also reduce our reliance and exposure to a single milling solution, further de-risking our future growth.
“Secondly, upon closing, the addition of a second mill is anticipated to immediately increase our nominal processing capacity by over 60 per cent from 1.6 million tonnes per annum to about 2.6 million tonnes per annum.
“In addition, a second ball mill is already in place at the Lakewood site that is expected to increase capacity to 1.2 million tonnes per annum once commissioned.
“The addition of a second operating mill brings with it significant potential toll milling capacity – we intend to fill short-term spare capacity through toll milling arrangements at one or both of the Higginsville Mill and Lakewood Mill until the Beta Hunt expansion is completed. Upon completion of acquisition of the Lakewood Mill, we will begin to evaluate mill optimisation opportunities to maximise the efficiencies at both mills as a single, significantly de-risked business.”
