Kidman Resources will acquire the Burbanks gold mine, located near Coolgardie in Western Australia.

Burbanks is currently producing on a reduced scale under private ownership, and recent mine development has opened access to mineralized zones in both the Christmas open pit and Birthday Gift, which is underground. Drilling has outlined further extensive gold mineralization at both Burbanks and Coolgardie North, and there is outstanding exploration potential at both projects.

Kidman’s schedule at Burbanks allows for a short break in production while both reverse circulation (RC) and diamond drilling is undertaken to upgrade mineralized zones to JORC-compliant Resource and Reserve status, both in the open pit and underground. Under this timetable, processing will start in the third quarter of 2015 at the nearby Greenfields Mill with a view to producing 20,000 to 25,000 oz in the first year.

Kidman Resources will pay Blue Tiger Mines Pty Ltd $3 million for an 80% stake in the Burbanks mine and the nearby Coolgardie North gold project, which includes the Gunga open-pit mine. Kidman will also inject $2.4 million to a total working capital pool of $3 million to help fund resource definition drilling and the stage one mining plan at Burbanks.

“These assets will enable Kidman to generate production and cash flow quickly and for very little capital outlay,” said Kidman Managing Director Martin Donohue. “Drilling has demonstrated that there is extensive mineralization at both projects and that it remains open in several directions. In particular, the high-grade nature of the Burbanks mine bodes well for a high-margin operation, and the company intends to apply appropriate mining methods as dictated by the ore body to maintain grades.”

Ore will be processed at the Greenfields mill, which uses both gravity and CIL with annual capacity of up to 1.2 million metric tons (mt) per year. The mill is strategically located between both Burbanks and Coolgardie North and is only 13 km from Burbanks.