The agreement is with gold major Northern Star Resources Ltd (ASX:NST), who will buy the first 100,000 tonnes of ore produced at a fixed gold price of $1,650 per ounce.
The ore will be supplied at a minimum grade of 2.75 g/t and will be delivered in parcels of 10,000-25,000 tonnes over a six-month period starting October 1, 2018.
First ore is planned from the Geko pit this October in line with the agreement.
‘Locking in consistent revenue’
Coolgardie managing director Bradd Granville said the agreement was a significant milestone for the company.
He said: “This agreement [is] transitioning us from developer to producer and locking in consistent revenue through to quarter 2, 2019.
Purchase agreements for each parcel of ore will be established with Northern Star after sampling procedures are completed and the grade has been confirmed and agreed.
Coolgardie expects the sale agreement to generate more than $10 million in revenue throughout its duration.
Agreement in line with Northern Star regional hub strategy
Northern Star chief executive officer Stuart Tonkin said the agreement was an opportunity to partner with an emerging junior in the Coolgardie area.
Tonkin said: “[The agreement] is consistent with our regional hub strategy following our acquisition of the South Kalgoorlie Operations earlier this year.”
Net smelter royalty
Bulletin Resources Ltd (ASX:BNR), which is entitled through its wholly-owned subsidiary Gekogold Pty Ltd to a net smelter royalty, announced yesterday that based on the ore production schedule it expected to receive royalty income from early 2019.
This would be payable in cash, comprising:
10% of the first 25,000 ounces of gold produced;
4% of the next 60,039 ounces produced; and
2% of all production above 85,039 ounces.
Additional toll milling on the cards
The Geko Gold Mine has a mineral reserve of 1.578 million tonnes of ore at an average grade of 1.8 g/t gold.
Other toll-milling options are being negotiated with nearby gold mills for the treatment of Geko’s remaining ore.
The clay content and higher-grade nature of the supergene oxide component of the Geko deposit makes the ore suitable for blending with fresh underground ore.