Photo by: Bloomberg
PERTH (miningweekly.com) – The share price of junior Frontier Resources doubled on Monday after the company announced that it would buy an 80% shareholding in the Gold Ridge mine, on the Solomon Islands.
Fellow-listed gold miner St Barbara earlier in May completed the divestment of the Gold Ridge project to Solomon Islands company Goldridge Community Investment for an undisclosed amount.
Operations at the Gold Ridge mine were suspended in April last year, owing to torrential rainfall and ensuing flooding. To date, St Barbara had been unable to resume production from the mine site owing to a number of reasons, including the presence of illegal miners at the site and infrastructure damage.
Frontier said on Monday that the consideration payable to Goldridge Community Investment for an 80% interest in the project was a 20% deferred carried interest into production, repayable for 50% of Goldridge Community Investment’s pro-rate share of future profits, as well as the issuance of 19.9% share equity in Frontier and the deferred issuance of 4.98% share equity in Frontier one year from the start of joint venture operations.
Frontier chairperson Peter McNeil said on Monday that Frontier would focus on bringing the Gold Ridge mine back into production as soon as possible, subject to a feasibility study.
“We will also commence exploration and resource infill drilling to attempt to demonstrate significantly enhanced total resources and reserves, targeting a larger and higher grade gold zone to enable a more robust and significantly longer-life mine.”
McNeil noted that there were a number of good near-mine drill targets available for further exploration.
The Gold Ridge mine includes a 2.5-million-tonne-a-year carbon-in-leach processing plant, and has a mineral resource of some 3.18-million ounces of gold, within 64.2-million tonnes of resource, grading 1.5 g/t gold. Total ore reserves had been estimated at 0.67-million ounces.
Frontier traded at a high of 1.1c a share on Monday, up from an opening price of 0.4c a share.