AuStar Gold is set to acquire Centennial Mining following the Victorian gold producer’s appointment of administrators in March.
The consolidation will transform AuStar into a multi-mine production company with a strong strategic footprint and substantial processing facility.
Centennial has been unable to resolve operational issues and remains in administration as the deal is announced.
The company is developing and producing gold from the A1 underground mine near Woods Point in Victoria.
Centennial also owns the Maldon processing plant near Bendigo, a facility which comprises a crushing, processing and cyanide-in-leach (CIL) circuit, along with tailings disposal facility.
AuStar’s acquisition will supplement its mineral inventories at the Morning Star and Rose of Denmark mines with those of the A1 gold mine. The Morning Star and A1 mines are 15 kilometres from one another.
The comapny plans to process the material from the three mines at its Morning Star gravity processing plant to produce gold bullion and high-grade, sulphide-rich concentrate.
Combined, the two companies’ operations will optimise material haulage to the Maldon CIL circuit and lift overall group recoveries.
AuStar will also take ownership of Centennial’s Union Hill mine adjacent to the Maldon processing plant following the merger.
“AuStar Gold has publicly stated that regional consolidation is a logical part of our overall growth strategy,” company chairman Frank Terranova said.
“The potential combination of these assets will accelerate our objective of creating a truly sustainable and scalable gold company within the region.”
AuStar plans to commence a four-day initial trial batch processing of A1 ore at Morning Star this week.
This acquisition is subject to AuStar obtaining shareholder approvals, fundraising to a minimum of $4.4 million and consolidation of the company’s securities.
Centennial administrators have limited A1’s mining to around 420 tonnes of ore a week to reduce costs to a sustainable level during the administration period.