Chinova Resources and the BIM Metals group have bought into the Lorena gold project, 15km east of Cloncurry.

Malachite Resources and Ore Processing Services have been advancing the project since entering a heads of agreement in April.

They announced today that they had reached a new joint venture/funding arrangement with Cloncurry Gold Recovery Management (CGR).

CGR is the manager of a joint venture between Chinova Resources Tennant Creek (a subsidiary of Chinova Resources) and BIM Gold.

Chinova Resources holds a number of projects in the Mount Isa Inlier including the Osborne and Merlin projects, while BIM Gold is part of the BIM Metals group, a private mining and contracting company operating a number of projects in the Cloncurry and Mount Isa region.

Terms of the new joint venture/funding arrangement include:

• CGR will fund the preliminary project capital requirements of $2.5 million for Lorena (rather than Malachite
  funding $2 million as previously contemplated under the HoA);
• OPS will exercise its option to acquire the existing on-site Lorena concentrator;
• CGR and OPS will fund project development to commencement of commercial production.

Once the operation is commissioned, Malachite will have a 55 per cent interest, CGR will hold 30 per cent, and OPS 15 per cent.

The agreement will see CGR provide a CIL (Carbon-In-Leach) plant on site by October to treat gold concentrate and tailings.

It will also complete preliminary capital works including construction of the tailings dam, water structures and initial mining.

Malachite said the project had continued to advance in recent months, with fuel tanks delivered on site in late June 2017.

OPS has completed an electrical engineering review of the existing concentrator, CGR has purchased a Knelson concentrator to improve the recovery in the processing plant and fabrication of the CIL plant is under way.

It is expected that the Lorena gold project will produce 30,000 to 35,000 oz of recovered gold in 18 months of production from an open-cut operation, at an operating cost of about $950 per gold ounce.