Kingston Resources Ltd (ASX:KSN) has transitioned to the ranks of Australian gold producers after completing the acquisition of the operating Mineral Hill Mine in the prolific Cobar Basin of western New South Wales.
Through this acquisition, Kingston has become a producing mining company with a diversified asset base in the Asia-Pacific region that also includes the 3.8-million-ounce Misima Gold Project in PNG at which a definitive feasibility study is due for completion this quarter.
Mineral Hill, a gold and copper mine, is ramping up production from the processing of existing tailings with full production rates targeted to be reached during the current quarter.
Transition to producer
Managing director Andrew Corbett said: “The completion of the Mineral Hill acquisition marks a significant achievement for Kingston Resources, representing the transition from a developer to a producer and propelling the company immediately into the ranks of gold producers on the ASX.
"I would like to thank Kingston’s shareholders for supporting the acquisition and I am excited to get our team on the ground at site."
Tailings operation
The tailings processing operation will provide a foundation for Kingston to unlock the broader potential of the asset, with minimal capital required to access several production-ready open pit and underground deposits.
These initial production opportunities include the Pearse and Pearse North deposits, the Southern Ore Zone, Jacks Hut and the Parkers Hill deposit.
In addition, there are a number of advanced exploration targets across the broader tenement package which the company intends to pursue aggressively.
Focus of activities
Corbett said: “The focus of activities post-completion includes the ramp-up of the tailings reprocessing project in parallel with the restart of exploration and resource drilling.
"Exploration at Mineral Hill is one of the key pillars underpinning our aspiration to become a leading diversified mid-tier gold and base metal producer in the Asia-Pacific region.
“Strategically, the processing plant is ideally located within the Cobar Basin to take advantage of both internal and external near-mine opportunities. Plus, the near-term cash-flow and significant gold and copper exposure make for a fantastic strategic fit with our cornerstone development asset, the 3.8-million-ounce Misima Gold Project in PNG.”
Alongside current production, exploration is focusing on near mine production opportunities from open pit and underground targets located on the existing MLs.
Consideration
The acquisition was executed via an agreement to purchase 100% of Mineral Hill Pty Ltd from Quintana MH Holdings Co. LLC.
Kingston has now paid US$1 million in cash and issued 54,914,882 shares to Quintana in settlement of the upfront consideration under the purchase agreement.
Further deferred consideration includes a 2% NSR royalty on future production from the project area. Additionally, deferred payments of up to US$8 million are due upon reaching certain gold production milestones from the tailings project.
Kingston has funded the transaction through a $14 million placement and ongoing share purchase plan that closes on January 31, 2022.