Kingwest Resources (ASX: KWR) is set to form a joint venture with FMR Investments that will see gold production recommence at its Menzies Gold Project more than 20 years since its closure.
The 40% KWR / 60% FMR profit share JV is expected to be formed by 30 November 2021, and is considered to be the first step in unlocking the commercial potential of the project with underground mining kicking off at the project’s Yunndaga deposit.
Menzies is one of Western Australia’s major historic gold fields, and has seen limited modern exploration since its closure over 20 years ago. The Yunndaga underground JORC mineral resource estimate comprises 57,000 ounces @ 4.6 g/t Au (3.0 g/t Au cut off) or 79,200 ounces @ 3.7g/t Au (2.0 g/t Au cut off), with mineralisation open at depth and to the north.
KWR reports that Yunndaga houses multiple high-grade shoots which were last mined underground approximately 85 years ago to a depth of 600 vertical metres. Output from the Princess May Shoot is reported to have produced 526,000t @ 16g/t Au for 270,000 ounces.
Speaking on the news, Kingwest CEO Ed Turner said: “We are very pleased to complete a Joint Venture mining agreement with FMR. To recommence commercial mining at Menzies after more than 20 years since open cut mining finished and 85 years since it was last mined from underground at Yunndaga is very significant. This is expected to be the first of a number of mining operations at Menzies and to deliver attractive short- and medium-term cash inflow to KWR. KWR will continue to focus on the very exciting potential we are seeing at Goongarrie as well as proving up new gold resources at Menzies over time. I am sure there remains many more ounces of gold to be discovered at both projects.”
“To recommence commercial mining at Menzies after more than 20 years since open cut mining finished and 85 years since it was last mined from underground at Yunndaga is very significant”
As per the key terms of the Yunndaga Mining Zone JV, FMR will cover all capital costs and will be responsible for all mining, haulage, and processing through FMR’s Greenfields Mill in Coolgardie. For due diligence purposes, FMR will complete drilling from surface with commitments to complete this within six months of a signed JV agreement.
FMR will also pay Kingwest a non-refundable amount of $500,000 within 1 month of the signing of the JV agreement, along with a further non-refundable payment of $500,000, due within one month after first cut in the decline is fired.
The joint venture will cover 180,000 gold ounces or 5 years from the commencement of mining, whichever occurs first. Upon termination of the JV, full control of the Yunndaga Mining Zone and its operations will revert 100% to KWR.
Images: Kingwest Resources Limited