The mine and mill have been on a production hiatus since March as Intrepid conducted development work to open up a new resource area, but Paulsens has yielded more than 373,000 ounces of gold (1.53 million tonnes at 7.6 grams per tonne) since the start of operations five years ago and the current mine plan still shows 45,000oz is economically available.
The estimated resource at the project is 314,000t at 12.8gpt for 128,700oz.
Intrepid chief executive Brad Gordon said the mine had served Intrepid well, but “no longer fits into our plan to develop a world-class mining company”
He said the divestment would allow the company to focus on its Tujuh Bukit project in Indonesia.
Northern Star, which has been casting about for a new project for some time, will pay $15 million up front to acquire Paulsens, plus a royalty of $200/oz to a $12 million cap.
The WA junior will take on debt to pay for its initial outlay, having finished the March quarter with only $124,000 at bank.
The company has also appointed Veridian Equity Group to raise working capital, seeking to raise up to $4 million on the market, and expecting to raise up to another $6.3 million through existing shareholder exercising options.
Northern Star said the current 45,000oz mine plan will be mined through by early 2011, generating $25 million free cash (at a gold price of $1200/oz).
The company expects to deliver a new ore reserve statement by October, and then begin work on extending the project’s mine life beyond 2011.
Northern Star will spend $5 million on drilling this year, to extend and improve confidence in the inferred resource estimate of 100,000 tonnes at 11gpt for 39,000oz.
New project acquisition
Northern Star, after a long period of dormancy, has come out of the gates quickly. The company also announced the acquisition of a new exploration project in the Murchison Mineral field, around 80 kilometres away from Sandfire’s DeGrussa deposit.
Northern Star said the exploration license was won in a “strongly contested” ballot. The 110 square kilometre copper-gold project is 70km north of Meekatharra, and Northern Star said the geology of the area was similar to Sandfire’s DeGrussa project.
Intrepid was unchanged at 38.5c on the news, and Northern Star surged on the buy, up 51.1% to 6.8c and trading as high as 11.5c at one stage this morning.
