Toronto-based TVX Gold (TSE) has paid about US$47 million for Greek-based Kassandra Mines.
The company’s assets, situated on the Chalidiki peninsula in northeastern Greece, include mining concessions covering 314 sq. km; three operating silver-lead-zinc mines; base metal milling facilities capable of processing 3,000 tonnes of ore per day; and a ship-loading facility on the Aegean Sea. The assets were auctioned by a liquidator on the grounds that they had become outdated and uneconomic.
Nevertheless, TVX is confident the silver-lead-zinc operations can be rendered economic by an infusion of capital. The company plans to install pressure oxidation technology in an attempt to recover about 90% of the refractory gold from existing reserves.
Current reserves stand at 14 million tonnes averaging 3% lead, 4% zinc, 6.3 grams gold and 100 grams silver per tonne. There is also a stockpile of 250,000 tonnes of sulphide ore averaging 22.65 grams gold and 3 million tonnes of tailings which average up to 3 grams gold.
The polymetallic orebodies are massive sulphide replacement deposits within Paleozoic-aged marble units. Mineralization is found in areas where the marble is cut by numerous aplitic dykes and sills. Schists and gneisses are found in the hangingwall of the ore zones.
The capital cost required for upgrading the project is estimated at US$180 million, to be spent over the next three years. About US$32 million will be spent modifying the existing mining and milling operations, and the remaining US$148 million will be used to construct the gold processing plant. TVX expects the gold plant to be operating at 50% capacity within 24 months from the date the deal closes. It should reach full capacity another 12 months thereafter.
Upgrading of the milling operations is expected to be complete six months after the closing date.
The Kassandra properties are expected to yield more than 190,000 oz. gold-equivalent in the first year of operation. Once operating at full capacity, the properties will produce 300,000 oz. gold-equivalent per year for the following three years. Depending on exploration results, TVX expects to produce more than 180,000 oz. thereafter.
A mine life of 20 years is anticipated, dating from startup of the gold plant. Cash operating costs on a gold-equivalent basis are expected to be less than US$200 per oz.
As consideration, TVX will pay US$19 million on the closing date, expected around the end of May. In addition, the company will pay US$5.6 million on each of the next five anniversary dates.
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