Gold miner forks out $10.7 million for West Australian farms

Gold miner forks out $10.7 million for West Australian farms

More than 1,000 hectares of farmland has been snapped up by a gold miner with a view to establishing a new operation near Katanning.

Key points:

  • Ausgold spent $10.7 million on farmland to progress its Katanning Gold Mine project
  • The miner picked up 1,026 hectares of land in the deal
  • The region’s shire president has welcomed the sale

The two properties have been bought by Ausgold to further develop its Katanning gold mine.

Ausgold managing director Matthew Greentree said the project, which had been in the pipeline for more than 10 years, would be an open cut mine.

He said the purchase of the land was a major step.

Mr Greentree said engineering and feasibility studies were underway with plans to begin mining in about 18 months.

“That’s what we’re working on at the moment and you’ll see a lot more news around that over the coming months,” he said.

The mine sits in the middle of prime agricultural land but Mr Greentree said some of the mine’s land would remain as farmland.

Ausgold says it will begin construction on the mine in about 18 months.(Supplied: Perth Mint)

He said some of the farmland purchased was to create buffer between mining activity and surrounding agriculture.

“The main things that are going on at the moment, you know, we’ve gone and spoken to the local community,” he said.

“And that’s really an important part of this project as well, because we do have a community that we’re consulting with and explaining what this project looks like.”

Mr Greentree said the project would provide employment opportunities for many in the region with about 150 workers needed.

“There’ll be a financial boost to the community,” he said.

He acknowledged turning farmland into a mine might cause concern among some in the region.

“There’s mixed views on, the change of the identity,” Mr Greentree said.

“We’re going to work really hard to make sure that this is integrating in the community, we don’t want to just drop this on top of Katanning.”

Ausgold has told the ASX it is targeting completion of a definitive feasibility study by the end of 2024 and that previous estimates have suggested it could cost $297 million to bring into production.

According to stock market filings, the company had just $9.4 million in the bank at June 30, and so would likely need to tap investors for additional funds to complete the sale.

Ausgold raised $12 million through a capital raising in April, which issued more than 266 million shares to institutional and sophisticated investors at 4.5 cents each.

Its shares were trading down slightly after Thursday’s announcement at 3.1 cents.

Liz Guidera welcomes Ausgold’s purchase of farmland.(ABC Great Southern: Sophie Johnson)

Shire support

Katanning Shire president Liz Guidera welcomed the purchase of the farmland.

“I think in some way, we were relieved, because purchasing the property is such a key part of the project going forward,” she said.

“They’ve been testing the area for many years, and they’ve come up with some very large gold deposits is my understanding.”

She said the company had told community leaders construction of the mine would start by the end of 2024.

The project has significant community support, with a shire study citing an 85 per cent support rate for the development.

“[At] the well-attended community meetings that Ausgold held, there was really only a couple of people speaking against it, and these issues were largely to do with flora and fauna,” Ms Guidera said.

“There’s certainly going to be some real positives, not only for our community, but for the whole of the upper Great Southern.

“We’ve got things like your clubs and schools and organisations; you can see a real invigoration with new people coming to town, so that’s a real great benefit for our community and for our surrounding communities.”

Mining, farming co-exist

A similar scenario has played out in recent years in the Wheatbelt.

The Tampia project was in a wheat paddock on the outskirts of Narembeen.

Gold miner Ramelius Resources in January 2021 acquired the freehold farmland it was located on for $6 million.

Mining began in May 2021 and ore was trucked 140 kilometres to the Edna May mine, near Westonia, for processing.

Ramelius Resources managing director Mark Zeptner said the open pit at Tampia was completed earlier this year and the site was being rehabilitated.

Mark Zeptner’s company also purchased farmland to mine gold.(ABC Goldfields: Jarrod Lucas)

He said further cutbacks at Tampia were planned but high costs in the sector would require an Australian dollar gold price above $3,000 an ounce before development could proceed.

“There’s another chance to go back at a later date … because the ore body does extend below the pit,” he said.

“I like to think we’ve left it in a pretty good state, we’ve bought the farm and allowed a Narembeen co-op to farm the paddocks around the mine and that goes to the community.

“We say, ‘you look after the farm’, for a very small annual lease and that goes to the Shire [of Narembeen] in a benefit fund.

“We don’t get any benefit from the $6 million we paid for the farm, except mining, because that’s our core focus.”

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