Auric Mining (ASX: AWJ) has cleared the pathway towards developing an open pit mine at its Munda gold project near Widgiemooltha in Western Australia’s Goldfields region after paying $1.2 million to WIN Metals for the site’s nickel and lithium rights.
The company says the deal allows it sole mining rights down to about 150m for at least the next eight years and also comes with a significant water access agreement, negating what management had envisaged as a “major challenge”.
Auric says it will now forge ahead with a trial pit at Munda, potentially allowing it to start mining at the beginning of next year. The company will have exclusive access to stored water – a scarce commodity in the area – in the 132 North pit for three years and will then have shared access for an additional five years. The wider acquisition includes five tenements at Spargoville and two applications at Higginsville, valued at $70,000.
After the eight-year deal period, WIN will retain the right to develop a decline from within the Auric rights area, a move that can occur alongside ongoing open pit mining.
An initial deposit of $100,000 has been paid by Auric, with a further $600,000 due at the end of the month upon settlement. Additional payments include $300,000 in December and $200,000 in June next year.
The company now holds all mineral rights, including lithium and nickel from the surface to 150m in the planned mining area, while WIN retains the rights to nickel and lithium below that level.
We now have greater control over our destiny for open pit gold mining at the Munda Gold Project. Securing the nickel and lithium rights from WIN Metals down to the 235m RL and having sole rights to an agreed area means we have taken another major step forward to commencing a trial pit at Munda. There’s not much water around Widgiemooltha, so as part of this transaction we are acquiring access to stored water in the 132 North pit from WIN, removing a significant obstacle for us.
Auric Mining managing director Mark English
English said WIN had been “pragmatic” in the negotiations between the two companies and believed a major hurdle for Auric’s plans had been removed as it homed in on Munda’s gold potential. The company has long projected Munda as a major play within its operations and has now stepped significantly closer to turning those words into reality.
The Munda deposit, 98 km south of Kalgoorlie and within Auric’s greater Widgiemooltha gold project, was highlighted by the company in a scoping study last year that outlined plans to open pit mine between 112,000 and 129,000 ounces of gold during a mine life of three to five years before third-party toll treating at a local mill.
The total resource of 200,000 ounces, with grades above 2 grams per tonne as confirmed by recent grade-control drilling, is forecast to generate free surplus cash of $76.9 million using a gold price of $2600 per ounce. Today’s Australian gold price is more than $3621 an ounce.
Auric has also now completed a second successful mining campaign at its first producing gold mine, Jeffrey’s Find, near Norseman, generating a further $2 million in free surplus cash after the first campaign last year brought in $4.7 million.
In addition to Jeffrey’s Find and its Widgiemooltha operations, including the Munda deposit, Auric also holds the Spargoville project, 30km north of Widgiemooltha. Spargoville combines eight tenements and sits along strike from the Wattle Dam gold mine that produced 268,000 ounces of gold at a grade of 10g/t from 2006 to 2013 and is considered one of Australia’s highest-grade mines of that time.
With no debt and cash rolling in from its Norseman operations, Auric is setting its sights on becoming unique among junior gold companies by having two gold mines up and running within a two-year period. If successful, it would mark an extraordinary feat of planning, cash management and tenacity, potentially delivering up to $20 million of free surplus cash a year on assets that had, by and large, been left to the birds.
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