Ramelius Resources managing director Ian Gordon. Picture: Michael Wilson/The West Australian.
Ramelius Resources managing director Ian Gordon. Picture: Michael Wilson/The West Australian.

UPDATE 2.25pm: Ramelius Resources has announced the acquisition of the Kathleen Valley gold project for $4.05 million in cash.

The company said it had signed a deal with Glencore subsidiary Xstrata Nickel and Giralia Resources which were joint venture partners in the Kathleen Valley and Mt Harris projects.

The Kathleen Valley tenements, 50km north of Leinster, host a mineral resource of 130,000 ounces across three deposits.

Ramelius said it would conduct further drilling over the next six months in a bid to upgrade the resource.

It said scoping studies had already indicated the potential for a high-grade, open pit mine with low capital costs.

Managing director Ian Gordon said the acquisition of Kathleen Valley would add significantly to the company's recently-acquired Vivien gold project.

He said it would enable cost reduction synergies across both projects and significantly build on the strategy to create a high-yielding, cashflow-positive mining business, centred on the established Mt Magnet million operations.

Last month, Ramelius released a feasibility study showing it would cost at least $20 million to develop the Vivien mine, which is expected to produce 109,000 ounces over an initial 30-month mine life.

Underground development, which could start as early as September, is expected to take eight months.

Shares in Ramelius closed off 0.2 cents, or 2.06 per cent, at 9.5 cents.

The West Australian

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