WPG Resources has entered into an exclusive Option Agreement to acquire exploration assets from the Challenger Gold Mine and Kingsgate Consolidated.
Diversified Minerals, an entity within the PYBAR Group, has agreed to enter into a 50/50 joint venture over these assets with WPG as manager when the option is exercised.
WPG’s Executive Chairman Bob Duffin said, “Challenger is an excellent asset which WPG has had it eye on for some time. WPG has already undertaken substantial technical due diligence on the Challenger mine and believe that the mine can be successfully re-opened through a combination of smaller scale mining and reducing mining dilution.”
WPG and DMPL are looking to re-open the Challenger Gold mine after development of a revised mining plan based on extraction of known resources focused on the Challenger West mineralised zone.
According to Kingsgate CEO, Greg Foulis, “The sale of Challenger is a key plant in our strategy of reinvigorating the company. Kingsgate retains a $25 per ounce royalty on the Challenger South by South West Zone as a key part of the agreement, which will ensure we can capitalise on any future exploration upside with the purchaser taking on the full closure and rehabilitation liabilities.”
PYBAR will be working alongside WPG, Kingsgate and DPML to provide a safe, rapid underground infrastructure development project that delivers from large established mining operations to greenfield developments.
Kingsgate estimates that 20,000 to 25,000 ounces of gold will be produced between the end of the September quarter and the completion of commercial production in February 2016.
Over the last 18 months, the mine has been able to operate profitably and make further savings through minimising mining dilution and restricting the mine’s operating costs.
Duffin anticipates over 140,000 ounces of gold will be remaining in the resource when the mine is placed on care and maintenance during the completion of an agreed Mine Plan by KCN.
Despite a promising start ahead of the US Federal Reserve decision on interest rates on Wednesday, gold prices plummeted $30 an ounce from where it had originally been trading due to an announcement from the central bank.
Gold was exchanging from $1,145 –down more than 3 per cent from $1,183 ahead of the Fed statement, at a three week low.