Kingsgate Consolidated has announced that it has sold its Challenger gold mine in South Australia to a 50-50 joint venture between WPG Resources and Diversified Minerals Pty Ltd (an entity within the PYBAR Group) for A$1 million and a $25-per-ounce revenue royalty that will kick in after the first 30,000 ounces of production.
According to the ASX Announcement, Kingsgate will continue to operate the Challenger Gold Mine until its closure on 28 February 2016 when it will be placed on care and maintenance with no residual employee of contractor liabilities.
“Challenger is an excellent asset which WPG has had its 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,” said WPG’s Executive Chairman Bob Duffin.
“The Challenger Gold mine has operated successfully for over 10 years and has produced in excess of 1 million ounces of gold. Kingsgate has successfully demonstrated over the last 18 months that by controlling costs, the mine can be operated profitably and we expect further savings through minimising mining dilution and further restructuring of the mine’s operating costs. We are delighted to be working with the PYBAR Group whose expertise in the efficient mining and narrow orebodies will be a key to the successful re-opening of the mine.”
Mr Duffin also said that the company expects there will be over 140,000 ounces of gold remaining in resource after the mine is placed on care and maintenance.
“DMPL is delighted to be joining with WPG and see the re-opening of the Challenger mine as a significant first step in building a longer term and strategic relationship with WPG. The PYBAR Group has strong expertise in the successful and efficient mining and narrow orebodies and believe that the economics of the Challenger can be significantly enhanced by reducing mining dilution and optimised manning and equipment selection,” added DMPL Director Mr Andrew Rouse.