rns17 Nov 2015 07:04
Ferrex plc, the AIM quoted resource development company, is pleased to announce that it has entered into an agreement to acquire 100% of Australian private company Chaffers Mining ('Chaffers'). Chaffers has negotiated a five year tribute agreement with Paddington Goldfields, a subsidiary of Norton Goldfields ('Norton') to mine certain defined gold deposits located on the Norton leases, located 30km north of Kalgoorlie in the heart of the Western Australian goldfields, for treatment at Norton's nearby Paddington processing plant.
The acquisition will enable Ferrex to commence production and cash generation with only working capital expenditure in Q2 2016. The funds delivered will be used towards the development of the Nayega Manganese Project ('Nayega') located in Togo upon receipt of the mining permit. This acquisition follows a recently completed strategic review by the Company focused on how to best deliver rapid value to shareholders in the current commodity pricing environment.
Overview
· Low acquisition cost, cash generative mining opportunity in a geographically stable mining jurisdiction:
o Production targeted to commence Q2 2016, initially targeting 20,000 to 30,000 ounces per annum
o Agreement covers historic resources of more than 350,000 ounces of gold at a grade of 2g/t
o Mining leases granted - deposits comprised of remnant resources below historic pits and previously unmined near-surface deposits
o Limited working capital costs to commence production estimated at GBP300,000
o Leases located 25km from the mill in an area of excellent infrastructure
o Ferrex to pay mining and processing costs, plus 22% royalty on gold recovered to Norton
· Low cost consideration and addition of highly experienced mining personnel to Board and management which will add further significant and relevant skills to Ferrex
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