Hanking Gold Mining, a unit of China Hanking Holdings, has entered into an agreement to acquire Southern Cross (SXO) gold mining operations from Australian gold producer and explorer St Barbara for A$22.5m ($23.77m).

The sale comprises of the Marvel Loch underground mine, a 2.2 million tonne per annum processing plant and a portfolio of potential exploration leases with an approximate book value of $10m.

Under the deal, Hanking will pay a $5m deposit and assume the rehabilitation obligations applying to the tenements being sold.

The SXO property is spread across a strike length of 120km in the Southern Cross greenstone belt, comprising indicated and inferred gold resources of 2.4 million oz at an average grade of 3.6g for each tonne of gold.

Mining and processing operations at SXO ceased at the end of 2012 and have subsequently been placed onto care and maintenance.

Following the acquisition, Hanking Gold will restart the Marvel mine and expand operations with new investments in exploration and development.

According to the company’s preliminary studies, SXO has a capacity to generate 200,000oz of gold annually for ten years.

Hanking Gold executive director and CEO Dr Pan Guocheng said the transaction follows the company’s recent acquisition of an Indonesian laterite nickel project, thereby diversifying its product range as well as geographical reach.

"The acquisition demonstrates the firm position of the company to become an international mining player.

"The addition of a gold asset into the resource portfolio of the company will strengthen the company’s capacity for a sustainable growth and create values for its shareholders in a long run," Guocheng said.

The transaction is subject to approval from the Foreign Investment Review Board of Australia.