PERTH (miningweekly.com) – Junior gold miner Minera Gold on Thursday announced that it had signed a binding option agreement to acquire the San Santiago gold and copper processing plant for $5.5-million.

The plant was currently the subject of a lease agreement, under which Minera would treat ore from its Torrecillas gold project, in Peru.

MD Ashley Pattison said that acquiring the plant outright would not only save Minera about $1-million a year on its current lease commitments for the gold circuit and reduce its all-in cash costs per gold ounce, but it would also deliver a second processing and revenue stream from the treatment of copper sourced from the surrounding 9 000 ha of concession also being acquired.

“This saving represents an estimated drop in all-in cash costs for Torrecillas from A$780/oz to A$700/oz. It will also provide immediate solid cash flow from the current toll treatment of copper through the plant’s two copper circuits,” he added.

The San Santiago plant, which is currently being commissioned after a refurbishment by Minera, includes a three-circuit processing complex. The acquisition also included the leases of mining rights to 9 000 ha of copper-prospective and currently producing concessions around the processing plant.

Meanwhile, Minera reported on Thursday that it had garnered strong support from metal streaming house SilverStream, which would lead the proposed financing and inject $3-million into the San Santiago plant acquisition.

SilverStream would provide Minera with a total of $4.5-million in new funding, which could be drawn down in two tranches, the first of which was the initial $3-million on exercise of the acquisition option.

A further $1.5-million could be drawn down on Minera being granted an expanded permit to operate the plant's two copper circuits at a minimum total of 500 t/d.

The remaining $2.5-million of the acquisition price would be sourced through a concentrate offtake pre-pay arrangement or term debt facility with an established commodity trader, Minera said.

The terms of this portion of the funding were still being finalised and negotiations were ongoing with a number of potential financiers.