Havilah Resources has executed a contract for mining of its wholly-owned Portia gold deposit in South Australia, northwest of the city of Broken Hill. The contract, which includes funding arrangements, is with well-respected and experienced Broken Hill-based mining and civil contracting company Consolidated Mining & Civil Pty Ltd.
Consolidated has mining contracts in place with Cristal Mining and Perilya Limited, which both operate in the Broken Hill region.
Consolidated will be responsible for funding and performing mining operations and delivery of gold ore to the surface stockpile at its sole expense and risk. Havilah subsidiary Benagerie Gold will be responsible for processing the ore and producing gold ingots for delivery to a refiner at its sole expense.
Revenue (or physical gold) will be shared 50:50 for all gravity recoverable gold mined from the Portia deposit. A joint operating committee, chaired by Benagerie, will oversee the operation and receive and consider additional reports, with day-to-day mining activities being the responsibility of Consolidated.
Consolidated will provide a bank guarantee to Benagerie to enable it to lodge the $1.95 million rehabilitation bond required by the Mines Department as a condition of the mining approval.
Benagerie will be responsible for access payments to the landholder and the Adnyamathanha native title claimants triggered by the commencement of mining. Both parties will be jointly responsible for payment of a 1% revenue royalty to a previous corporate owner of the deposit, the State Government and gold refining costs.
Consolidated’s mining schedule sees first gold delivered to the processing plant by June 2016. With this mining and financing arrangement in place and based on the current gold price and exchange rates, the Portia gold mine stands to deliver substantial returns to Havilah in 2016.
Havilah’s managing director Chris Giles says that Havilah will not be required to raise additional capital to meet its obligations because all mining costs will be funded by the mining contractor, including the rehabilitation bond obligation. “Havilah is in effect sharing a portion of the gold revenue with the contractor, who will fund the cost of delivering the gold ore to surface for processing.”