RNC Minerals Corp (TSE:RNX) said the previously announced purchase option agreement for the Higginsville Mill operations in Australia had been extended, as it issued production figures for the first quarter at Beta Hunt, where there has been a limited restart to mining.
The deal to buy Westgold Resources Ltd's mine and mill for a total of A$50 million was announced in March and is expected to provide significant synergies, including a 35% cost saving per tonne versus the firm's current toll milling arrangements.
READ: RNC Minerals sees significant cost savings in Higginsville operations acquisition; announces $12M bought deal financing
The move was also said to add an expected 40,000 to 45,000 ounces of gold production in 2019.
Today's announced extension will allow the parties to settle definitive documentation and confirm the exercise of the option. Due diligence is substantially complete, said RNC.
For the three months to end March, Beta Hunt saw 34,000 gold tonnes mined at an average grade of 3.36 g/t (grams per ton) to produce 3,716 ounces, which was a 73% decrease on the same period of 2018.
The reduction in output comes after the firm decided in November last year to temporarily ramp down mining to focus on drilling off the main shear zone resources and compile an updated resource estimate.
In March this year, RNC announced the drilling program had sufficiently advanced to allow for a limited restart of mining.
The first quarter saw gold sales of 6,375 ounces, down from 7,978 in the first quarter of 2018.
"We are now entering an exciting phase at Beta Hunt," said Mark Selby, President and CEO. "The limited restart, which began during the first quarter, has already achieved a 40,000 ounce annualized run rate in April 2019 after production in the first quarter for both coarse gold and overall production were in line with our previously announced ramp down.
"Development is now sufficiently advanced to allow mining activities to begin this month underneath the Father's Day Vein Discovery on 16 Level. This development will target a 1,406 g/t intersection sitting just 7 metres below the Father's Day Vein area. We remain on track to complete an updated resource estimate by the end of June and fully restart production later this year which, pending a successful conclusion to the Westgold transaction, will be delivered to a fully integrated Beta Hunt - Higginsville operation."
RNC Minerals shares added over 5% in Toronto to $0.40 each.
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