Mining contractor appointed at Empire Resource’s Penny’s Find gold mine
Empire Resources Limited (ASX:ERL) has reached an agreement to enter into a mining contract and payment agreements with NRW Civil and Mining (ASX:NWH).
NWH is a Perth-based national civil, mining and construction services provider.
Under the agreement, NWH will carry out open pit mining operations at ERL’s Penny’s Find gold mine located 50km northeast of Kalgoorlie, WA.
Through the terms of agreement ERL will have sufficient funds to carry out mining activities through to the commencement of gold production.
However, mining and exploration isn’t without risks and anything can happen in this time. If considering ERL for your portfolio seek professional financial advice.
Site works are already underway, with mining due to commence in November, followed by ore treatment through third party processor Lakewood Mill in Kalgoorlie, which is anticipated to begin early 2017.
ERL’s agreement with NWH involves delayed payment, in return NRW will earn a 9.5% gold royalty for the life of the open pit mine.
NWH will defer costs to ERL from the initial mine start up to a minimum of four months.
Mining activities are set to commence once the 1.8km re-alignment of the Kurnalpi-Pinjin Road is compelted. ERL requiring to alter the road as it ran over the Penny’s Find deposit.
The re-alignment is expected to be completed by October 2016.
The banking feasibility study conducted on Penny’s Find earlier this year, based on a gold price of A$1,500/oz, showed that the open pit operation alone would generate around $7.6M in free cash flow in less than a year.
The study also found that for every $100 increase in the price of gold, the open pit would generate an additional $2M in free cash flow.
ERL still has a number of hurdles to overcome before it enters production so all figures are based on future potential and not the current state of the business.