Kingwest Resources and FMR Investments Pty Ltd have agreed to form a mining and processing joint venture aimed at restarting gold production at the Menzies Project in Western Australia.
The first step commercial step in realising the potential of the Menzies Project will see the partners work towards recommencing underground mining at Yunndga Deposit.
Profits will be split 40% to KWR and 60% to FMR with the latter to cover all capital costs and be responsible for all mining, haulage and processing through its Greenfields Mill in Coolgardie.
The joint venture agreement covers 180,000 ounces of gold or five years from the commencement of mining, whichever occurs first.
FMR will make a non-refundable payment of $500,000 within the first month of signing the JV agreement and a further non-refundable payment of $500,000 within one month after the first cut in the decline is fired.
First of many operations
Yunndaga has multiple high-grade off-shoots and was last mined underground about 85 years ago. Historical mining achieved a depth of 600 vertical metres with the Princess May Shoot which produced 526,000 tonnes at 16 g/t gold for 270,000 ounces.
“We are very pleased to complete a joint venture mining agreement with FMR. To recommence commercial mining at Menzies after more than 20 years since open cut mining finished and 85 years since it was last mined from underground at Yunndaga is very significant,” Kingwest CEO Ed Turner said.
“This is expected to be the first of a number of mining operations at Menzies and to deliver attractive short- and medium-term cash inflow to KWR.
"KWR will continue to focus on the very exciting potential we are seeing at Goongarrie as well as proving up new gold resources at Menzies over time. I am sure there remains many more ounces of gold to be discovered at both projects.”
Reflecting the company's confidence, shares have been as much as 26% higher on the news to 17 cents.
Location of the Yunndaga mineral resource estimate within the Menzies Gold Project.
Key terms of JV for Yunndaga
1. JV to cover 180,000 (mined contained) gold ounces produced from the Yunndaga Mining Zone (YMZ) or five years from the commencement of mining at the YMZ, whichever occurs first. Upon termination of the JV, full control of the YMZ and its operations will revert 100% to KWR.
2. FMR completes drilling from surface at FMR’s cost for due diligence purposes. FMR will commit to completing this within six months of a signed JV agreement.
3. FMR will pay KWR a non-refundable payment of $500,000 within one month of the signing of the JV agreement and a further non-refundable payment of $500,000, due within one month after first cut in the decline is fired.
4. The YMZ is to be mined and processed according to a mining and production schedule to be agreed between FMR and KWR and included in the JV agreement.
5. FMR will fund all exploration, development, mining, treatment, and rehabilitation activities at the YMZ during the term of the JV.
6. FMR will be responsible for the Project Management Plan for the YMZ. KWR will be responsible for the Mining Proposal (including Mine Closure Plan) and other tenement items such as environmental, bonds, water licensing, waste dump approvals etc.
7. Milling of any ore extracted from the YMZ will occur at FMR’s Greenfield’s Mill and is to be charged to the JV at a fixed rate per dry metric tonne.
8. The terms sheet remains subject to completion of due diligence by both parties and KWR and FMR entering into a binding JV agreement.
About the companies
Kingswest Resources is a mining and exploration company engaged in advancing its gold projects into production and discovering new gold resources in its highly prospective projects in the Eastern Goldfields region of Western Australia.
The MGP is one of Western Australia’s major historic goldfields with a strike length in excess of 15 kilometres. Within the MGP a series of structurally controlled high-grade gold deposits have been historically mined and display extensive exploration potential for high-grade extensions. Modern exploration since closure over 20 years ago has been limited.
The MGP is hosted along the Menzies Shear Zone. All deposits lie within granted Mining Leases and are 100% owned by KWR.
MGP has recorded historical production of 643,200 ounces at 22.5 g/t gold from underground between 1895 and 1943 and 145,000 ounces at 2.6 g/t gold open cut between 1995 and 1999, for a total of 787,200 ounces at 18.9 g/t.
FMR is an Australian organisation with interests predominantly in mining and mining related industries. FMR originally operated as specialist underground mining contractors until its contracting business, Barminco Limited, was sold in 2007.
Today, FMR operates the Eloise Copper Mine, Gordon Sirdar Gold Mine and the Greenfield Mill at Coolgardie which toll treats ore from a number of regional mining projects.