Reed Resources Ltd has bought the Meekatharra gold project for $26.7 million from Mercator Gold Australia Pty Ltd. The mine located in the Murchison region of Western Australia may lead to the creation of a mid-tier gold producing company as a spinoff from the main company assets.
There are plans to do a full geological and mining review of the project to help re-estimate and re-optimise the Meekatharra resources. Reed Resources is hoping that the new review undertaken will lead to significant increase in the mine’s reserves. Especially as the review will take into account the current soaring gold prices.
The Managing Director of Reed Resources Christopher Reed said that the purchase of the mine would place the company in a strong position to become a mid tier gold producer. As per the sale deal the company will make a payment of $2 million in 48 hours and two further instalments of $ 15 million and $ 8 million on 31 March and 30 June respectively to Mercator.
Mercator Gold is currently in administration and it had cited reserves of more than 0.42 million ounces in 2007. They have been producing 44,000 ounces of gold in the 18 months that they operated the Meekatharra gold mine. Production was suspended in October 2008.