Evolution Mining has ended Norton Gold Fields right to mine and process ore from the Castle Hill gold deposit at the Mungari operation in Western Australia through an agreement between the companies.
The agreement also allows Evolution to explore and develop a package of tenements near Mungari that were previously quarantined by Norton.
Evolution will pay Norton an upfront payment of $12 million in cash followed by an additional $3 million six months after completion of the transaction, along with a 2 per cent net smelter royalty for the first 38,000 ounces (oz) of gold production from certain tenements within Castle Hill.
The termination agreement extends to Norton’s previously agreed clawback rights, royalties and other purchase options.
The site had been effectively quarantined due to Norton’s delay in completing a stage one open pit as per its right-to-mine agreement, according to Evolution.
Castle Hill possesses a JORC 2012-compliant mineral resource of 19.32 million tonnes (Mt) at 1.12 grams per tonne (g/t) of gold (695,000oz) and an ore reserve of 5.35Mt at 1.38g/t of gold (236,000oz).
This is expected to provide a significant boost to Mungari’s measured, indicated and inferred resources (as of December 2017) of 54.26Mt at 1.47g/t of gold (2.56Moz).
The transfer of tenement rights to Evolution is also expected to provide a significant boost to Mungari’s mine life, according to chairman Jake Klein.
“Full ownership of Castle Hill materially extends the mine life at Mungari and provides the flexibility to optimise the long-term future of the operation,” Klein said.
“Importantly, we now have control over the timing of development at Castle Hill.”