Magellan Minerals Ltd. is pleased to announce that it has reached an agreement with ASX listed Troy Resources Ltd. for the purchase of Troy's gold processing plant, associated equipment and mining fleet at its Andorinhas mine located in eastern Para state, Brazil.
Key components of the deal are as follows:
- Magellan will pay Troy a total consideration of US$4.5M for the Andorinhas Assets
- The processing plant, which is scheduled to be decommissioned during Q4 CY 2015, consists of an 800 t/day crushing and grinding facility, a gravity recovery circuit and a carbon-in-pulp recovery circuit
- The mining fleet consists of drills, LHD's, trucks and other pieces of mobile equipment that were used for underground mining at Andorinhas, as well as all spares and consumables currently on site
- Of the US$4.5M purchase consideration, Magellan will pay Troy a non-refundable deposit of US$150,000 cash within 30 days. A further US$3.35M is to be paid by 15th December 2015 and may, at Magellan's election, comprise up to a maximum of 9.99% of Magellan's issued and outstanding share capital at that time
- An additional US$1M will be paid to Troy following the production of 20,000oz of gold or after 18 months, whichever comes soonest
- Troy will have the ability to appoint a representative to the Magellan Board should its shareholding in Magellan exceed 7.5%, or as otherwise agreed
Troy previously operated the Andorinhas underground mine using shrinkage and cut and fill mining methods accessed via a 5m x 5m decline, which is very similar to the concept being developed for Coringa. As such, the mobile fleet, stope mining equipment, and major support equipment, such as fans and pumps, will be directly transferrable for use at Coringa.
Magellan representatives have visited the Troy site and process plant on two separate occasions in recent weeks and have observed that the plant is running well, and is extremely well suited for use at Coringa. The crushing plant consists of a jaw crusher feeding two cone crushers, which feed a grinding plant with two ball mills. The gravity section uses a Knelson concentrator, which feeds an ILR plant (Acacia). The process section includes all tankage for leaching, CIP and detox, followed by elution and electro-winning. The plant also comes with a well equipped lab, gold room and sophisticated security systems, and much of the electrical and control equipment is containerized allowing for easy transport to and installation at Coringa.
In addition, the agreement includes all spares, reagents and consumables currently on site. Some of this miscellaneous equipment and spares includes several kilometers of power cable and HDPE pipe, electrical panels, power transformers, various pumps and maintenance tools.
This agreement represents a major step forward for Magellan which is expected to result in significant savings in terms of capital costs and construction times. Magellan is currently working to finalize its assessment of the impact of this transaction on the ongoing feasibility study at Coringa. The focus will now be on securing funding for the acquisition.
Alan Carter, President and CEO of Magellan commented: "This represents a major step forward for Magellan in its drive to build the high grade Coringa mine. The timing of the shutdown at Andorinhas has been fortuitous for us. We plan to follow Troy's model of building and operating mines in Brazil for the fast-track development of Coringa. Let there be no doubt of our commitment to build this mine."
John Kiernan, VP Project Development stated "Troy's Andorinhas plant is currently operating well and is ideally suited for the scale and process requirements of the Coringa property, providing immediate capex savings relative to the previously published Preliminary Economic Assessment, and shortened asset procurement lead times. The fact that this deal also includes much of Troy's underground and site mobile equipment plus remaining consumables and small tools further enhances the opportunity for construction of a "fit for purpose" mine plan at Coringa, that can grow into the full mine plan envisioned in the feasibility work completed to date."