Empire Resources has contracted Perth-based national civil, mining and construction service provider NRW Civil and Mining to undertake all open pit mining operations at the new Penny’s Find gold mine located 50km northeast of Kalgoorlie, in the Eastern Goldfields of WA.
Empire’s Managing Director, David Sargeant said the agreement ensures that Empire will have sufficient funds to conduct mining activities through to the commencement of gold production.
“The agreement with NRW Holdings now ensures the Penny’s Find gold project has adequate working capital for initial mining of the open pit,” he said.
“With site works already underway and mining commencing next month, gold ore treatment through the contracted third party processor, Lakewood Mill at Kalgoorlie, is anticipated to start in early 2017.”
The terms of the agreement allow for delayed payment arrangements for mining and will see NRW earn 9.5% gold royalty for the life of the open pit once all outstanding considerations have been fully repaid.
The agreement covers only the mining operations of the open pit and is subject to final legal documentation.
Empire said it has also engaged Hampton Mining and Civil Services of Kalgoorlie to re-align the Kurnalpi – Pinjin Road with substantial progress already made.
“The 1.8km re-alignment is due to be completed by the end of October 2014 with mining of the open pit to commence thereafter,” Empire told the ASX.
“Agreement has also been reached with the owners of the old May Day open pit, located 13km north of Penny’s Find, to extract water for use in road construction.”
Penny’s Find has a gold inventory reserve of around 146,000 tonnes grading 4.62 grams per tonne gold, hosted within just the first 80 metres from surface.
The project’s Bankable Feasibility Study conducted earlier this year found that the open pit operation alone would generate around $7.6 million in free cash flow in less than a year. This estimate is based on a gold price of A$1,500/oz. Empire said that for every A$100 increase in the price of gold above the projected gold price, the open pit will generate an additional $2 million free cash flow.
“Empire is working to eventually take the mine underground as Penny’s Find’s gold mineralisation extends to at least 250m depth where it remains open with a current known deeper resource inventory of 170,000 tonnes @ 5.40g/t Au beneath the open pit,” reads the company’s statement.
“A detailed update on this is expected to e provided o he make during the December Quarter.”