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- Kingwest Resources (KWR) is set to form joint venture with FMR Investments to recommence gold production at the Menzies gold project in WA
- Through a term sheet, the joint venture will comprise a 40 per cent KWR, 60 per cent FMR profit share to restart mining at the Yunndaga undeground mine
- Within one month of signing, FMR will pay KWR $500,000, and a further $500,000 is due one month after first cut in the decline is fired
- Kingwest says the partnership is the first step in unlocking the commercial potential of the Menzies gold project
- KWR shares have been trading 18.5 per cent higher at 16 cents
Kingwest Resources (KWR) is set to form a joint venture with FMR Investments to recommence gold production at the Menzies gold project in Western Australia.
The MGP is one of Western Australia’s major historic goldfields which has seen limited modern exploration since its closure over 20 years ago.
The companies have entered into a term sheet to form a 40 per cent KWR, 60 per cent FMR profit share joint venture to recommence underground mining at the Yunndaga deposit within the MGP.
The Yunndaga mine reportedly has multiple high-grade shoots and was last mined underground approximately 85 years ago, with the Princess May Shoot producing 526,000 tonnes at 16 grams gold per tonne for 270,000 ounces.
KWR said the partnership is the first step in unlocking the commercial potential of the Menzies gold project.
The JV will cover 180,000 mined contained gold ounces produced, or five years from the commencement of mining at the underground mine, whichever occurs first.
The parties have agreed to negotiate in good faith with plans to enter a formal agreement by November 30, 2021.
FMR plans to pay KWR a non-refundable payment of $500,000 within one month of signing the agreement, and a further non-refundable payment of $500,000, due one month after first cut in the decline is fired.
Under the JV, FMR is set to cover all capital costs and be responsible for all mining, haulage and processing through its Greenfields Mill in Coolgardie.
Additionally, for due diligence purposes, FMR will complete drilling from surface with commitments to complete this within six months of a signed JV agreement.
KWR will be responsible for the mining proposal, including mine closure plan, and other tenement items such as environmental, bonds, water licensing, waste dump approvals.
If the JV is terminated, KWR will regain full control of the Yunndaga mining zone and its operations.
Shares were trading 18.5 per cent higher at 16 cents at 11:19 am AEDT.
