Resources & Energy Group has agreed to buy the Burbanks gold mine in Western Australia from Kidman Resources for $4.5 million.
Operations have been suspended at Burbanks since August after Kidman Resources received interest in the mine from multiple suitors. The interest followed a Kidman Resources announcement that it would focus its attention on the recently-acquired Mt Holland gold and lithium project in WA.
The deal involves a $2 million cash payment, as well as the issue of a $2.5 million convertible by Resources & Energy Group.
According to Kidman Resources, the Burbanks mine has a resource of 99,000 ounces at 5.6 grams per tonne. The acquisition offered Resources & Energy Group the opportunity to double its gold resources, the company said in a statement.
“The Burbanks acquisition is expected to achieve our dual goals of increasing the company’s resource base and delivering near term cash flow positive projects,” Resources & Energy Group chief executive officer Richard Poole said.
“Kidman Resources has been recently producing gold from the Burbanks mine and as such Resources & Energy Group is expecting that it will yield positive cash flow in the near term.”
Burbanks, which is 35 kilometres south-west of Kalgoorlie in WA’s Goldfields region, had produced 366,300 ounces of gold up to 2015.