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Excelsior signs milling deal with Norton Gold Fields

Excelsior signs milling deal with Norton Gold Fields

Photo by Bloomberg

18th June 2014

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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PERTH (miningweekly.com) – The share price of ASX-listed junior Excelsior Gold increased by nearly 13% on Wednesday after the company executed a term sheet with fellow-listed Norton Gold Fields providing for long-term milling allocation at the Paddington mill, in Western Australia.

The agreement allowed Excelsior a minimum allocation of 2.5-million tonnes, with the allocation expected to be used at a rate of 500 000 t/y over a five-year period.

The allocation could be extended for a further five years, providing a cumulative allocation of up to five-million tonnes.

Excelsior has committed to partly contributing to the capital expenditure required to potentially upgrade and refurbish the Paddington mill, with the company’s commitment capped at A$12.5-million.

The 3.5-million-tonne-a-year Paddington mill is about 20 km from Excelsior’s Kalgoorlie North gold project, and provides the company with a close proximity milling solution, said MD David Hamlyn.

“Securing access to a large mill such as Paddington, within very close proximity to the Kalgoorlie North gold project, provides significant cost benefits to Excelsior. These cost benefits and the high-grade nature of the Zoroastrian deposit in particular, are expected to generate significant free cash flow for Excelsior,” he added.

With the key commercial terms now agreed upon with Norton, Excelsior would accelerate mine development drilling and detailed mine planning, which would include a re-estimation of the openpit and underground ore reserves at Zoroastrian, and the satellite deposits.

Excelsior would also start discussions on debt funding the mine development costs and capital required for its share of the proposed Paddington mill upgrade.

Mining was initially expected to start from the Zoroastrian deposit, with first treatment expected in early 2016.

Excelsior shares were trading at a high of 8c a share on Wednesday, up from a low of 7.5c a share.

Edited by Creamer Media Reporter

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