Drummond Gold has reached an agreement to acquire the Maldon Gold project in the Australian state of Victoria from Alliance Resources.
The deal, which is subject to the consideration of an independent expert, is aimed at achieving early gold production and strengthening the company’s capacity to develop its projects in the Drummond Basin in Queensland, Drummond said.
Under the agreement, Drummond would issue its fully paid ordinary shares to acquire Maldon Resources, a wholly owned subsidiary of Alliance and owner of the Maldon Gold Project.
Gold production is expected as early as the first half of 2010 and surplus cashflow will be used to develop the company’s other projects, Drummond managing director Doug Grewar said.
“I am confident that the independent expert’s valuation will confirm that the scrip only acquisition of Maldon represents value for Drummond, particularly considering that most of the mine access and infrastructure are already in place,” Grewar said.
The mine has historically produced a total of 1.75 million ounces of gold at an average grade of 28 g/t but development was suspended late last year to conserve cash to meet Alliance’s commitments to its Four Mile uranium project.
Drummond will establish two gold production hubs to develop the Mt Coolon and Maldon’s regions.