TORONTO, May 24, 2022
/CNW/ - Karora Resources Inc. (TSX: KRR) (OTCQX: KRRGF) ("Karora"
or the "Corporation") is pleased to announce that it has
entered into a binding agreement to acquire the operating, fully
permitted 1.0 Mtpa Lakewood Mill gold processing facility located
near Kalgoorlie, Western
Australia, approximately 60 kilometres from the Beta Hunt
Mine. The acquisition price of A$80
million is comprised of A$70
million in cash and A$10
million in Karora shares. Karora successfully tolled Beta
Hunt material through the Lakewood mill in Q1 2022, achieving 94%
Au recovery.
The transaction is subject to, among other conditions,
satisfactory completion by Karora of its due diligence, Toronto
Stock Exchange approval and Australian regulatory approval. Closing
will occur three business days following the satisfaction or waiver
of such conditions. The A$10 million
in Karora share consideration will be satisfied by the issuance of
shares based on a 20-day volume weighted average share price on the
TSX and applicable currency exchange rates. Karora has paid a
A$500,000 deposit to the seller to be
deducted from the cash portion of the purchase price due at
closing.
Paul Andre Huet, Chairman &
CEO, commented: "Closing the acquisition of the Lakewood Mill would
be a transformational step forward for Karora, similar to the
Higginsville mill acquisition in June
2019. Not only is the Lakewood mill closer to Beta Hunt than
Higginsville, but the acquisition would provide several immediate
strategic and operating benefits to Karora.
First and foremost, it is anticipated that the acquisition would
immediately de-risk our growth plan to increase gold production to
between 185,000 and 205,000 ounces by 2024, by eliminating the
procurement, schedule and construction risks associated with a
major expansion of Karora's Higginsville Mill. In the current
highly inflationary capital environment, which is negatively
impacting many of our peers, we expect that this acquisition would
take that risk completely off the table. We would also reduce our
reliance and exposure to a single milling solution, further
de-risking our future growth.
Secondly, upon closing, the addition of a second mill is
anticipated to immediately increase our nominal processing capacity
by over 60% from 1.6 Mtpa to approximately 2.6 Mtpa. In addition, a
second ball mill is already in place at the Lakewood site that is
expected to increase capacity to 1.2 Mtpa once commissioned. In the
first quarter, we toll milled 60,000 tonnes of Beta Hunt material
through the Lakewood mill yielding a 94% recovery rate. This
provides us with a high degree of comfort regarding the
metallurgical performance of our material through this mill.
The addition of a second operating mill brings with it
significant potential toll milling capacity - we intend to fill
short-term spare capacity through toll milling arrangements at one
or both of the Higginsville Mill and Lakewood Mill until the Beta
Hunt expansion is completed. Upon completion of acquisition of the
Lakewood Mill, we will begin to evaluate mill optimization
opportunities to maximize the efficiencies at both mills as a
single, significantly de-risked business.
The expansion to double production from Beta Hunt to 2 Mtpa is
well underway and, as previously announced this morning, the
development of the second decline is tracking ahead of schedule and
on budget.
Lastly, and certainly not least, the future potential to expand
the Higginsville mill to 2.5 Mtpa on its own remains, should we
find the requisite feed sources and once the current inflationary
environment has passed. With this acquisition, we expect that our
milling bottleneck days will be well and truly in the rear-view
mirror. I am thrilled to be able to announce this transaction to
our shareholders."
About Karora Resources
Karora is focused on increasing gold production to a targeted
range of 185,000-205,000 ounces by 2024 at its integrated Beta Hunt
Gold Mine and Higginsville Gold Operations ("HGO") in Western Australia. The Higginsville treatment
facility is a low-cost 1.6 Mtpa processing plant, expanding to a
planned 2.5 Mtpa by 2024, which is fed at capacity from Karora's
underground Beta Hunt mine and Higginsville mines. At Beta Hunt, a
robust gold Mineral Resource and Reserve are hosted in multiple
gold shears, with gold intersections along a 4 km strike length
remaining open in multiple directions. HGO has a substantial
Mineral gold Resource and Reserve and prospective land package
totaling approximately 1,900 square kilometers. The Company also
owns the high grade Spargos Reward project, which came into
production in 2021. Karora has a strong Board and management team
focused on delivering shareholder value and responsible mining, as
demonstrated by Karora's commitment to reducing emissions across
its operations. Karora's common shares trade on the TSX under the
symbol KRR and also trade on the OTCQX market under the symbol
KRRGF.
Cautionary Statement Concerning
Forward-Looking Statements
This news release contains "forward-looking information"
including without limitation statements relating to the
Karora's production guidance, the completion the acquisition of the
Lakewood Mill gold processing facility, the de-risking of Karora's
growth plan, the anticipated benefits of the Lakewood Mill gold
processing facility, the potential of the Beta Hunt Mine,
Higginsville Gold Operation, the Aquarius Project and the Spargos
Gold Project and the commencement of mining at the Spargos Gold
Project.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Karora to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements. Factors that could
affect the outcome include, among others: future prices and the
supply of metals; the results of drilling; inability to raise the
money necessary to incur the expenditures required to retain and
advance the properties; environmental liabilities (known and
unknown); general business, economic, competitive, political and
social uncertainties; results of exploration programs; accidents,
labour disputes and other risks of the mining industry; political
instability, terrorism, insurrection or war; or delays in obtaining
governmental approvals, projected cash operating costs, failure to
obtain regulatory or shareholder approvals. For a more detailed
discussion of such risks and other factors that could cause actual
results to differ materially from those expressed or implied by
such forward-looking statements, refer to Karora 's filings with
Canadian securities regulators, including the most recent Annual
Information Form, available on SEDAR at www.sedar.com.
Although Karora has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking statements,
there may be other factors that cause actions, events or results to
differ from those anticipated, estimated or intended.
Forward-looking statements contained herein are made as of the date
of this news release and Karora disclaims any obligation to update
any forward-looking statements, whether as a result of new
information, future events or results or otherwise, except as
required by applicable securities laws.
SOURCE Karora Resources Inc.