Javelin Minerals has locked in a profit-sharing mining agreement with renowned contract firm MEGA Resources to mine 39,000 ounces of gold from its Eureka gold project near WA’s historic Kalgoorlie mining hub. In a huge win for Javelin, full-service contractor MEGA will fully fund the operation, covering the full spectrum of mining activities, project financing and haulage services.
Javelin Minerals has locked in a profit-sharing mining agreement with renowned contact firm MEGA Resources to mine 39,000 ounces of gold from its Eureka gold project near Western Australia’s historic Kalgoorlie mining hub.
In a boon for Javelin, full-service contractor MEGA will fully fund the operation, covering the full spectrum of mining activities, project financing and haulage services.
Javelin and MEGA are set to share the profits 50:50 from mining 39,000 ounces from the project, which has a mine plan of 698,887 tonnes at a grade of 1.98 grams per tonne (g/t) gold, ratcheting up the gold grade by 32 per cent above previous estimates.
Adding spice to the agreement is a $250,000 per month cash pre-payment to Javelin from its share of the expected profits. The pre-payments begin from the receipt of the first project revenues.
Further bolstering the project development is MEGA’s undertaking to stump up a working capital finance facility to develop the project, of up to $25 million, repayable from project revenues. Javelin will have no upfront funding requirements.
Eureka’s total mineral resource is 2.04Mt at 1.69g/t gold for 110,687 ounces, including a resource within the indicated category of 1.36Mt grading 1.8g/t for a solid 78,678 gold ounces.
Javelin will get 70 per cent of the profits from any additional resources mined above and beyond the agreed mine plan, from this or future projects at Eureka.
The company plans to kick off mining activities at the site in the June quarter next year. Eureka already possesses a coveted granted mining lease. MEGA will put in any hard yards necessary to obtain all the other relevant mining and other approvals. It will also provide geological and engineering services.
Discussions are at an advanced stage on inking a binding ore purchase agreement with a nearby third-party processing mill.
Javelin executive chairman Brett Mitchell said: “MEGA is a highly regarded mining contractor with the people, expertise and material balance sheet to support development of the project. Their ability to provide a fully integrated mining and financing solution will enable Javelin to advance towards production in the most time efficient and co-ordinated manner.”
Mitchell said with MEGA providing up to $25 million working capital finance, Javelin will not require additional funding for operations to commence at Eureka.
Javelin also revealed it has firm commitments to raise $4.5 million via a placement to savvy investors at 0.25 cents per share, a 25 per cent premium to yesterday’s 0.2c close. The shares leapt today to 0.3c a share at the close of business on a huge volume traded, exceeding 84 million shares.
MEGA can see more value in Javelin than just its Eureka project, having cornerstoned the raise with its own $1 million equity investment into the junior goldie. Following the placement’s completion, Javelin plans a 1-for-31 capital consolidation, subject to shareholder approval at an upcoming general meeting.
New drill programs are being planned at Eureka to test for extensions and growth to the existing gold resource.
Javelin is also running the rule over several potential WA Goldfields exploration plays to add fuel to its fired-up gold production strategy.
The company also recently added well-known gold executive Mark Cossom to its ranks as general manager for exploration and resources. Cossom previously worked as MD for Gateway Mining and as general manager of geology and exploration for Doray Minerals. Doray was subject to a takeover by Silver Lake Resources, now part of ASX-listed $4.4 billion mid-tier gold miner Vault Resources.
The Eureka project sits on four granted mining leases, 50 kilometres north of the nation’s best gold address at Kalgoorlie and 20km north of the large-scale Paddington gold operation, owned by growing gold giant Zijin Mining. Paddington is just one of several nearby operating mills.
Javelin management points out that the existing pit is in good nick and well-placed for mining operations to resume. The project is close to several million-ounce deposits, such as the Paddington and ASX-listed Ora Banda’s Davyhurst mines.
MEGA Resources is an Australian subsidiary of Bain Global Resources, part of BGR Mining and Infra Ltd, one of India’s largest mining contractors. BGR has an order book currently exceeding $18 billion.
Javelin is looking to make hay while the sun shines, utilising its newly beefed-up mine plan. And for obvious reasons, given gold is still going gangbusters at US$3675 (A$5507) per ounce and hit an all-time high last week.
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