Orion Resources Pty Ltd’s progress towards resuming gold production at the Cloncurry Gold Project is a pivotal development for AuKing Mining Ltd, which holds the right to acquire a 50% stake in Orion through a A$5 million expenditure commitment by June 30 2027.
As Orion moves closer to production, AuKing stands to gain significant exposure to early cash flow opportunities and resource expansion, reinforcing its strategic position in the gold sector.
Orion has entered into an asset sale agreement (ASA) to acquire the Lorena processing plant and associated facilities, located approximately 15 kilometres east of Cloncurry in northern Queensland, along with a portfolio of exploration and mining tenements in the region.
The Lorena plant is a conventional carbon-in-leach gold processing facility. Additionally, under the ASA, Orion is acquiring further exploration and mining tenements approximately 30 kilometres south of the Lorena plant, known as the Mt Freda/Golden Mile Project. In total, the acquisition covers 447 square kilometres in the Cloncurry region. The transaction is expected to reach financial close in April 2025.
Orion’s Cloncurry Gold Project interests, including the Mt Freda/Golden Mill mining leases. [Note the nearby Wynberg and Wallace/Wallace South gold projects are not assets being acquired by Orion].
AuKing managing director Paul Williams highlighted Orion's commitment to resuming gold production at Cloncurry as soon as possible while ensuring a structured and strategic approach through the industry-standard stage-gate process.
“The Orion management team have clearly identified the steps required to re-establish gold production operations at Cloncurry. However, importantly, this exercise continues to establish the potential to create significant project value. AuKing has the opportunity to acquire a 50% interest in Orion and share the benefits in this value creation with its own shareholders.”
Significant opportunity for AKN
AuKing has entered into an agreement with Orion, allowing it to earn up to a 50% interest in the Cloncurry Gold Project through shares in Orion, subject to the following terms:
AuKing can earn a 50% stake in the full asset package of the Cloncurry Gold Project, which Orion is acquiring, by investing A$5 million in project development activities. This includes exploration, drilling, and resource estimation at Mt Freda/Golden Mile, to be completed by June 30 2027.
AuKing will participate in project development activities focused on the Lorena plant and provide resource development funding for the planned Mt Freda/Golden Mile mining operation.
Upon completing the earn-in, AuKing and Orion will establish an incorporated joint venture, with AuKing holding a 50% shareholding interest in Orion.
If AuKing fails to meet the A$5 million expenditure commitment, its interest in the Cloncurry Gold Project will lapse.
Full steam ahead for Orion
Orion is preparing for its proposed acquisition of the Cloncurry Gold Project by recruiting experienced mining, geological, and minerals processing personnel. The team will oversee the restart of gold mining and processing activities. Orion has also developed a strategic plan with four key objectives: ensuring timely and cost-effective project execution, commencing profitable mineral production, improving corporate social responsibility and environmental performance, and prioritising geological and economic assessments to manage investment risks.
The Cloncurry Gold Project has several advantages, including existing processing infrastructure, prior feasibility studies, consolidated ownership of assets, and a strong gold price environment. Orion aims to restart mining at the Mt Freda deposit, which previously operated from 1987 to 1991, producing around 30,000oz per year. A 2023 Scoping Study recommends further drilling, metallurgical studies, infrastructure planning, and environmental assessments.
Additionally, Orion has entered a binding MoU with AuKing and Tick Hill Mining Pty Ltd to assess the feasibility of processing materials from the Tick Hill mine at the Lorena processing plant. A 2020 Pre-Feasibility Study confirmed the technical and economic viability of the Tick Hill project, with further studies planned to update cost and revenue models.