Malachite Resources to develop Lorena Gold Mine

THE BOURSE WHISPERER: Malachite Resources (ASX: MAR) has executed a Letter of Offer with MKS Switzerland (MKS), which the company said will allow it to proceed with the development of the Lorena gold project, located east of Cloncurry in northwest Queensland.

In developing the Lorena project, Malachite indicated it will use plant and equipment partially that had been constructed by BCD Resources, under a previous agreement which was terminated in May 2015.

As it turns out MKS is the ultimate secured lender to BCD and was appointed Receivers and Managers to that company in January 2015.

Malachite owns 100 per cent of the Lorena mining leases, which means it can develop of the project in its own right.

Once it has commissioned the project, Malachite will then, in accordance with a Project Development Plan to be agreed with MKS, earn 100 per cent ownership of the Lorena plant and equipment which had previously been funded by BCD.

“It is proposed that Malachite will sell the gold concentrate that it produces from the Stage 1 open cut at Lorena to MKS at the mine gate for 57 per cent of the agreed gold contained in the concentrate,” Malachite Resources said in its ASX announcement.

“MKS will in turn sell the concentrate to BCD on a separate contractual agreement such that BCD effectively receives 43 per cent of the agreed gold contained in concentrate from the Lorena Stage 1 open cut.

“Following completion of the Stage 1 open cut mine plan, Malachite will be entitled to 100 per cent of all gold produced subject only to a royalty in favour of BCD of 3.5 per cent of all gold produced at Lorena capped at 1,250 ounces of gold.”