PERTH (miningweekly.com) – Junior miner Reed Resources has sold its Meekatharra gold operation, in Western Australia, to fellow-listed Metals X for A$7.7-million.

The sales price included a A$7.1-million cash component, with Metals X also taking some 24-million shares in Reed, at a nominal value of A$600 000.

The Meekatharra operation included a fully refurbished carbon-in-pulp processing plant with a 2.5-million-tonne-a-year capacity, a 200-person camp, a mineral resource of some 3.55-million ounces, and a total ore reserve of 752 000 oz.

“This is a great acquisition for Metals X and a major step forward for our plans to bring our Central Murchison gold project to fruition,” said Metals X CEO Peter Cook.

He noted that the metric of just over A$2/oz of resource, with all the plant and infrastructure in place, was a significant value compared with the A$117-million capital expenditure required to build a new plant.

“More importantly, this acquisition provides a low capital risk solution for us to add to our gold production without debt, without construction risk and without external pressures for delivery. It also adds 3.5-million ounces to our existing five-million ounces of total mineral resource at the Central Murchison project,” Cook said.

The sale of the Meekatharra project was subject to the approval of subsidiary GMK Exploration’s creditors, the Foreign Investment Review Board, Ministerial consent and assignment of third party interest.

In August last year, Reed handed over its subsidiary GMK Exploration - which owns the Meekatharra gold project - to administrators, after the company failed to secure sufficient funding to support continued operations, and announced an asset impairment charge of some A$70-million for the 2013 financial year, on the back of declining commodity prices.

The administrators have subsequently started divesting of the GMK Exploration assets, selling the Comet Vale project for A$2-million earlier this year.

If the Meekatharra sale proceeded, Reed would receive some A$4-million, as it is GMK Exploration’s largest creditor and comprises around 78% of the total claims against the exploration company.