Tyranna Resources Ltd. entered a binding agreement to purchase the advanced Eureka gold project in Western Australia from Central Iron Ore Ltd. for a total of A$3.2 million, as the company looks to transition from an explorer to a producer.
The Eureka open-cut gold mine is being developed by a local contractor and is expected to start production in early December this year, according to the Dec. 1 release.
Central Iron recently signed a trial mining agreement with Eureka Mines Pty. Ltd. for the Eureka mine from the end of November 2017 until April 2018.
Production will extend the depth of the current open pit by about 20 meters and will be completed during the March quarter in 2018.
Tyranna will then estimate an updated ore reserve to restart mining following the results of a feasibility study, which will evaluate the possibility of mining and toll treating to nearby processing mills.
As part of the acquisition, the company will receive a 4% net smelter return royalty over sales from the property. All royalty receipts, including a A$250,000 prepayment, will be used to offset the purchase price.
Tyranna plans to use the cash generated from the Eureka project to fund exploration at its Jumbuck gold project in South Australia.
The company noted that it plans to kick off a 1,500-meter drilling program in December to bring the historic mineral resource in compliance with JORC 2012.
