Tombola Gold has inked a deal to buy the Lorena mine and gold processing facility to fast track production. Pic via Getty Images.
Tombola signs on to package deal for Lorena mine and processing plant
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Tombola has fast-tracked expansion of its gold production plans after signing a binding terms sheet to acquire the Lorena mine and processing facility in Queensland.
It will acquire the assets, which include fully permitted mining and exploration leases, the existing open cut gold and copper mine, a gold-copper processing plant with up to 300,000tpa capacity, and permitted tailings storage facility, for 50 million TBA shares and $5m in cash – $1m upfront and the balance over the next six to nine months.
The acquisition is structured to use its existing cash reserves and free cash flow generated by gold production.
The Lorena project is just 30km from Tombola Gold’s (ASX:TBA) flagship Mt Freda Gold Mine in Cloncurry, which is poised to start production in the third quarter.
Its acquisition will enable the company to fast-track expansion of its gold production plans from the fourth quarter of 2022 without incurring large capital costs for the construction of a carbon in leach (CIL) plant and tailings facility, and to undertake studies to optimise gold production by July 2023.
Timing is everything
With gold prices trading well near the US$1,850 ($2,658) per ounce mark and forecast to stay at or above this level in the near-term, the move looks to be incredibly well-timed on Tombola’s part.
“The acquisition of the Lorena Processing Facility delivers a step change for us in our targeted gold production,” managing director Byron Miles said.
“Importantly, it enables Tombola to commence planning to determine gold production rates as well as gold-optimisation planning studies.
“The company aspires to significantly increase its production potential in terms of expected throughput and recovery rate, once both the original vat leaching and the Lorena facility are on stream in 2023.”
The acquisition is subject to satisfactory due diligence activities, and shareholder approval at an EGM to be convened in late July 2022.
Lorena to process Golden Mile ore
Lorena is primarily a gold CIL processing facility with the capacity to treat copper-bearing ore located 13km from Cloncurry on the Flinders Highway and was commissioned in 2017 by a joint venture which included Malachite Resources and Chinova Resource.
Operations continued until late 2021 after which it was placed in care and maintenance pending a desire by the owners to sell the operation.
Subject to a satisfactory due diligence and shareholder approval, Tombola plans to recommission the plant, expand tailings capacity, and transport ore from the Golden Mile operation to Lorena along with continuing to vat leach treat the balance of mineable reserves at Mt Freda.
It is working with several third party consultants and advisors who are assisting the company with its plans to recommission and expand the facility with a relatively low capital expenditure before commencing treatment of Mt Freda and Golden Mile ore.
Mining activities well underway
The move to acquire Lorena comes as mining activities at Golden Mile advance well ahead of schedule with two open pits being developed at Comstock and Shamrock.
More than 15,000t of mineralised material has been stockpiled on the ROM pad in preparation for treatment.
Potential low-grade ore visually identified in the margins of the blasthole delineated ore zones are individually stockpiled on the bench below the main ore stockpile. These will be sampled prior to crushing to determine the feasibility of processing this material.
The company has already started mining work at the Mt Freda open pit, which was originally expected to produce about 64,000oz of gold over an initial 30 month life of mine.
Meanwhile, the Comstock, Shamrock and Falcon open pits at Golden Mile were originally expected to produce about 15,000oz of gold over an initial 20 months.
Ore production at the broader Mt Freda Gold Complex will be ramped up as further areas of mineralisation are uncovered.
This article was developed in collaboration with Tombola Gold, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
