Mutiny Gold (ASX: MYG) partner Cobra Mining plans to begin production at the 113,000 ounce White Well Gold Project in Western Australia this year.
On October 14, 2011 Mutiny entered into a “tribute mining agreement” with Cobra to fast track the development of White Well.
Part of this project's appeal and scope for early revenues is the free-digging nature of the ore. The majority of the gold at White Well occurs in vein quarts.
It is the deep weathering nature of the ore that allows for the majority of the deposit to be free-digging which negates much of the expensive drill and blast in conventional mines.
Following mining and economic studies, which included reviews of the metallurgy and geological data, Cobra has begun the permitting process to begin mining.
Production is expected to begin in the second half of 2012, with the project to be developed as an open pit mine.
Cobra is required to pay $750,000 on attaining approval of the mining proposal, of which Mutiny will receive 70%.
Mutiny managing director John Greeve said the activity at White Well was a positive development for Mutiny and its shareholders at a time when the company’s Deflector Project is also poised for production.
“In addition to the upfront $750,000 payment, the company expects to receive strong revenues from White Well over the coming years as mining operations ramp up,” Greeve said.
“This will supplement the expected strong revenues from the company’s flagship Deflector project which targeting commencement of production in late 2012.”
White Well alliance
The White Well alliance will see Cobra fund and conduct the mining operations for a 70% share of the profits.
Mutiny will receive 21% of profits, while joint venture partners Lee/Daxon will receive the remaining 9%.
The agreement will provide a revenue stream for Mutiny, allowing the company to take advantage of record gold prices with very low risk.
In addition it utilises Cobra’s expertise, financial strength and mining capabilities to bring the project into production.
The agreement with Cobra does not include the Bounty and Bligh advanced exploration targets, which are separate zones within the White Well tenement.
Importantly, Mutiny will use the White Well agreement as a pilot for multiple future alliance agreements on special selected small mines that require specific skills.
Deflector Gold Copper Project
In addition to White Well, Mutiny Gold is making significant progress at the Deflector gold copper project in Western Australia.
The company recently revealed that gold production costs are expected to be less than $600 per ounce; a substantial gain in metallurgical performance.
Achieved through refinements to the project’s flowsheets, this lift in gold and copper recoveries was an important step for the development of the project.
Mutiny is undertaking a Definitive Feasibility Study at Deflector.