THE BOURSE WHISPERER: Mutiny Gold has received confirmation from Cobra Mining that the latter intends to begin gold production at the White Well project in Western Australia in the second half of this year.
Mutiny entered into an agreement with Cobra last year that established fast-tracking of the development of the White Well gold project, located east of Cue in WA.
Under the deal Cobra will fund and conduct the mining operations for a 70 per cent share of the profit. Mutiny will receive 21 per cent, with joint venture partners Lee/Daxon receiving 9 per cent.
Over the last three months Cobra has conducted mining and economic studies on the project including comprehensive reviews of the metallurgy and geological data.
Resource for the White Well deposit. Source Company announcement
According to Mutiny Cobra has said it will commence the permitting process to begin mining and is aiming for production to commence in the second half of 2012.
Upon Cobra attaining approval of its mining proposal they must pay $750,000, of which Mutiny receives 70 per cent.
“The decision by Cobra to proceed with mining operations at White Well is a fantastic development for Mutiny shareholders,” Mutiny Gold managing director John Greeve said in the company’s announcement to the Australian Securities Exchange.
“In addition to the upfront $750,000 payment, the company expects to receive strong revenues from White Well over the coming years as mining operations ramp up.
“This will supplement the expected strong revenues from the company’s flagship Deflector project which targeting commencement of production in late 2012.”
Mutiny outlined the operation strategy for the White Well deposit to be mined by open pit.
The agreement does not include the advanced exploration targets of Bounty and Bligh, which are separate zones within the White Well tenement.
Mutiny said its alliance with Cobra provides it with an opportunity for a revenue stream in times of record gold prices at the lowest possible risk.
The company said the development of White Well comes at a time when it is moving ahead with its proposed development of the Deflector gold/copper project in Western Australia.