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PrintInvestors have responded warmly to Saracen Mineral Holdings’ latest gold acquisition, which will see the miner take control of a set of unloved gold assets in Western Australia.
The assets have been owned by Russian giant Norilsk since 2007.
Saracen shares climbed close to 13 per cent on Wednesday and hit three month highs on the back of the $20 million deal, which will see the ASX listed miner takeover the dormant Thunderbox mine and collection of smaller assets.
Norilsk’s loss-making Australian division has kept Thunderbox under care and maintenance in recent years as it focused on its nickel assets.
Despite the fall in the gold price over the past year, Saracen boss Raleigh Finlayson said he believes the mine could be brought back into production within 18 months.
‘The good news for us is they actually didn’t get the gold assets into production during that spike in the gold price,’ he said.
The mine has 728,000 ounces in official reserves, and the purchase price suggests it was bought for close to $30 per ounce.
If successfully brought back into production, it would be Saracen’s third operating mine, alongside Whirling Dervish and Red October.
Norilsk can earn another $3 million from Saracen if certain production amounts are achieved within a specified time.
Saracen closed 2.5¢, or 11.1 per cent higher at 25¢ on Wednesday.
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