Ramelius Resources will buy Glencore’s Kathleen Valley gold project for $4.05 million.
The company announced it had signed an agreement with Glencore subsidiary Xstrata Nickel and Giralia Resources to acquire 100 per cent of the tenements which include the Kathleen Valley and Mt Harris projects.
The tenements, located 50 km north of Leinster, contain a mineral resource of 13,000 ounces of gold across three deposits.
Ramelius intends to complete further resource definition drilling within the next six months to enable the company to upgrade the resources for use in future mine planning studies.
It said recent scoping studies indicate the potential for high grade open pit developments with low capital costs.
Managing director Ian Gordon said the acquisition would add significantly to the company’s recent purchase of the Vivien gold project from Agnew Gold Mining Company.
He said Ramelius would look to create synergies across both projects in an effort to reduce costs and build on the company’s strategy to create a high yielding, positive cash flow mining business centred on its established Mt Magnet milling operations.
A recent feasibility study showed it would cost $20 million to develop the Vivien mine.
The project is expected to produce 109,000 ounces over an initial 30-month mine life.
The company said the underground mine would take eight months to build and have an all-in operating costs of $890 per ounce.
Ramelius has submitted a mining proposal and project management plan for the Vivien project with the Department of Mines and Petroleum.