Gold miner Northern Star Resources has terminated its right-to-mine at Southern Gold’s Cannon gold mine in Western Australia.
Northern Star subsidiary, HBJ, secured a five-year right-to-mine agreement with Southern Gold after acquiring the South Kalgoorlie Operations, a collective of smaller companies, from Westgold Resources in March this year.
HBJ “for various operational and strategic reasons” has decided not to exercise this right-to-mine.
Northern Star has transferred the M25/357 mining lease and an L25/48 portion of the Cannon haul road to Southern Gold at no cost.
Southern Gold managing director Simon Mitchell said, “The execution of this agreement with Northern Star … enables Southern Gold to move forward with the asset where there is considerable value to be unlocked by a small underground mining operation.
“With the addition of the mining lease to the north, it also enables Southern Gold to have unfettered access, simplified and better optimised development scenarios and potential upside in the longer term, should the Cannon orebody continue to plunge to the north.”
The transferred tenements also include the Georges Reward deposit immediately to the north of Cannon, where the northern third of the Cannon open pit is. Southern Gold’s tenure now covers the strike extension of the Cannon shear zone.
Mitchell said Southern Gold could commence drilling the Cannon structure without restriction, and would fast track the project’s development in 2019.
Southern Gold assumes all environmental rehabilitation liabilities associated with the mining tenements, which is estimated to be around $77,500 (or $155,000 in today’s dollars).