Red River to acquire 100 per cent of the high-grade Hillgrove Gold-Antimony Project (Hillgrove) in New South Wales, Australia for a total acquisition cost of AU$4 million, payable in Red River shares.
|Hillgrove Gold-Antimony Project Site, showing processing infrastructure and layout|
Hillgrove contains significant infrastructure with a historical cost of AU$180 million, including existing processing plant, surface infrastructure, underground development, resource definition drilling and underground mining fleet.
Red River has entered into a binding agreement with Bracken Resources to acquire 100 per cent of the shares in Hillgrove Mines, which holds 100 per cent of the Hillgrove gold-antimony project.
The Hillgrove Project is located approximately 30 kilometres from Armidale in New South Wales. Historic mining activity commenced at the site in 1857 and ceased in 1921 and recommenced in 1969.
Since 2004, over AU$180 million has been invested in underground development, surface infrastructure and processing plant by Straits Resources Limited (2004 to 2009) and most recently by the current owner, Bracken Resources which acquired Hillgrove from Straits in 2013 for AU$33.2 million, plus the replacement of $3.9 million in environmental bonds provided by Straits.
Bracken subsequently invested over AU$40 million in upgrading and recommissioning Hillgrove with production of concentrates and antimony-gold concentrates commencing in 2014.
Hillgrove was placed on care and maintenance in 2016 due to low prevailing antimony prices.
Red River’s Managing Director Mel Palancian said that the Company has been working on the acquisition of the Hillgrove Gold-Antimony Project for over six months.
“It is a great addition to our portfolio,” commented Mr Palancian.
“We love gold and bringing mining assets back to life cheaply. It’s rare to find a high-grade gold asset that is close to production with quality resources and infrastructure. We can fund near term commitments from our strong existing cash balance and ongoing cash flow.
“We will continue to focus on production and growth at Thalanga as there is an exciting future ahead with significant growth potential. For Hillgrove, we will ensure a smooth transition of the asset and evaluate the opportunities by upgrading and growing resources and developing an optimised restart study.”
Since 2004, there has been significant investment, totalling over AU$180 million at Hillgrove, focussed on the processing plant, underground (UG) mine infrastructure and site infrastructure, but extending to other facets of the Project.
The site includes a 250ktpa capacity processing plant currently on active care and maintenance comprising a selective flotation circuit (capable of producing antimony-gold and refractory gold concentrates), an antimony leach/SXEW/refining & casting plant, a gold cyanide leach circuit and gold room and a pressure oxidation circuit.
The site also has a first aid/mine rescue centre and UG capable ambulance, plus on-site stores with approximately AU$2.2 million worth of stock and associated maintenance, administration buildings and laboratory/on site assay facilities.
A fully HDPE (high-density polyethylene) lined modern tailing storage facility, which was constructed in 2006, and has approximately two years of production storage capacity.
Hillgrove currently has a care and maintenance workforce of five people. When previously in operation, the site was a residential site, with the workforce living in Armidale. The total workforce was approximately 120 people, with UG mining carried out on an owner-operator basis utilising a comprehensive fleet of UG mining equipment which remains on site.
Hillgrove is connected to a 66kV power line and power is supplied to site via a 11kV step down transformer. Water is sourced locally and there is a reverse osmosis/microfiltration water treatment plant on site enabling treated site water to be discharged.
The previous operator produced an antimony-gold concentrate and a refractory concentrate. The concentrate was trucked to Port of Brisbane (approximately 500 kilometres) in 1 tonne bulka bags for export.
The transaction is subject to obtaining the New South Wales Minister for Energy and the Environment’s written approval to the acquisition of four Exploration Licences held by Hillgrove Mines, as per the Conditions of Title of all Exploration Licences granted under the Mining Act 1992 (NSW) (Mining Act).
The requirement to get written approval is not specific to the Hillgrove Project but is common to many EL’s held in NSW which will result in a change in the effective control of the holder.
It is anticipated that the Minister’s written consent can be obtained within 4-6 weeks.