The joint-owners of what was once ranked Australia’s longest continuously-running gold mine have confirmed discussions are underway about a possible consolidation.
- Pantoro and Tulla Resources share ownership at Norseman on a 50/50 basis
- Pantoro manages the Norseman project, which resumed gold production late last year
- Central Norseman was Australia’s longest continuously-running gold mine until it closed in 2014
Perth-based gold miner Pantoro and its Sydney-based joint venture partner Tulla Resources have owned what was previously known as the Central Norseman mining operation in Western Australia on a 50/50 basis since May 2019.
Both companies announced the negotiations to the ASX today in a deal likely to be worth more than $100 million, while Pantoro also announced it would suspend mining at its Halls Creek gold mine in WA’s Kimberley to focus on Norseman.
“Pantoro and Tulla Resources confirm that they are in detailed discussion on consolidation of the Norseman gold project into a single entity,” Pantoro managing director Paul Cmrlec said in a statement.
“Details of the potential transaction are being finalised with both parties negotiating in good faith with the intention to enter into a binding term sheet.
“There is no certainty that a transaction will be documented, announced or completed.”
Norseman, about 200 kilometres south of Kalgoorlie, was closed in 2014 when Pantoro bought its 50 per cent stake for $61 million in cash, shares and deferred royalty payments.
Pantoro also agreed to sole fund the first $50 million of project expenditure, which it completed in April 2021.
Norseman poured its first gold bar under Pantoro management in October last year after commissioning of a new $62 million mill.
The mine has an initial seven-year project life, with average production of 108,000 ounces a year, according to stock market filings.
“The company will update the market in the event of any material developments,” a Tulla spokesperson said in a statement.
“There is no certainty that a transaction will occur.”
Long history at Norseman
Central Norseman was once Australia’s longest continuously-running gold mine, producing about six million ounces from 1935 until its closure in 2014.
The mine was under ownership of Western Mining Corporation for most of its long history before Croesus Mining bought in back in 2002, before it went into administration in 2006.
Davos Resources, which acquired the mine for $70 million during 2007 and changed its name to Norseman Gold, suffered a similar fate before control passed to Tulla Resources in 2012.
Since production resumed on October 13, which was six weeks behind schedule, Pantoro told the ASX it had been conducting weekly gold pours, producing about 7,300 ounces.
The mill is processing ore from open pits at the Scotia mining centre and from the OK underground mine.
Pantoro spending big
When Pantoro tapped investors for $28.5 million in a capital-raising during October, it revealed to the stock market that it has spent $179 million at Norseman.
Of those funds, $56 million was spent on exploration, $84 million on construction costs and $39 million was spent on pre-production mining costs.
In its latest ASX update today, Pantoro said open pit mining rates had continued to improve since a new fleet, comprising a 200-tonne excavator and five 150-tonne trucks owned by contractor Hampton Mining and Civil, arrived on site and were commissioned during the December quarter.
The miner said the new fleet had been delayed by several months due to constraints with the equipment manufacturer.
“The larger 150-tonne trucks partially replace the fleet of 90-tonne trucks in operation at the mine, reducing required staff numbers and improving efficiency,” A Pantoro spokesperson said.
Dewatering at the OK underground mine is expected to be completed later this month, providing access to high-grade ore.
Meanwhile, Pantoro said its Halls Creek operations would continue mining for about six months until it was placed on care and maintenance, with rising costs and the availability of skilled labour blamed for the closure.