Austral Gold (ASX:AGD) has acquired a controlling 51% stake in Chilean mining services provider Humberto Reyes Arriendo de Maquinarias SpA (Humberto Reyes) for US$2.7 million.
Humberto Reyes has been undertaking underground contract mining at the company’s Guanaco mine since 2011.
It owns mining equipment and associated vehicles with a book value of US$4 million.
The transaction is expected to deliver important annualised savings to the Guanaco mine, which produces over 4,000 gold equivalent ounces per month.
It also provides flexibility to accelerate mining of the Guanaco mine resource; allows greater control over safety and production practices at the Guanaco mine; ensures a continued competitive cost for future underground development; and grants greater control over the Guanaco mine operations.
Austral will make an initial upfront payment of US$450,000 and the remainder in monthly cash instalments over three years from existing cash reserves.
It also has an option to acquire the remaining 49% in 2.5 years at a price to be agreed upon by both parties.
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