Ausgold’s $35 million land deal ends legal action, paving path forward for expansion of Katanning gold project

A $35 million deal has ended long-running legal action, paving the way for Ausgold to acquire 860ha of freehold land needed to develop the $355m Katanning gold project in the Great Southern. Ausgold informed the market on Thursday of the binding agreement with “unrelated parties” for the land which forms a significant portion of the project’s proposed development footprint at Badgebup, 30km north-east of Katanning. The $35m price includes compensation for the relocation of the four families who currently occupy the land. The news comes after the company went to the Wardens Court last week with two plaints to sort out compensation and surface rights issues. On Thursday, Ausgold said the land acquisition agreement eliminated the need for the plaints, which had now been discontinued, bringing to an end the legal action which had been running since August 2023. The company said the land included about 212ha of its mining licence and a “material proportion” of the project’s mineral resource and open pit mineable ounces. Ausgold said the land also included a substantial extra buffer area around the mining licence zone, significantly improving the prospects for future expansion of the project. The company said this meant it could update the definitive feasibility study released in June, with the goal of adding life-of-mine gold production from areas which were previously excluded from production estimates because of the tenure constraints. It said it could also reduce mining costs by relocating waste dumps to more favourable places and thereby reducing haulage distances. Ausgold said the deal meant the land must be vacated by February 28, 2027, before the anticipated start of mining. The company said the agreement also allowed it immediate access to conduct exploration, studies and surveys. It said despite having mineral tenure over the land it had been denied access for several years while the dispute relating to the plaints had been ongoing. But now it would start a multi-rig drilling program on the land, targeting key areas. Ausgold said it would pay $15m of the $35m by next Tuesday, and another $20m by August 26 next year, or before that date if a final investment decision was made. The company said it had $45m in the bank at July 31. Ausgold executive chairman John Dorward said securing the land was the “key” de-risking event for the project’s development. “Land access issues, which have impaired the optimal development of the Katanning gold project up to this point, have now been removed and we can now get on with the unfinished business of determining the full potential of this emerging gold district,” he said. “Significant gold endowment was artificially excluded from the (definitive feasibility study) due to previous tenure constraints and we look forward to showcasing the full potential of the (project). “We expect to be able to deliver material enhancements to the existing project as we progress our permitting and financing activities toward a final investment decision.” The June definitive feasibility study estimated the project would have a 10-year mine life and cost $355m to build. The study estimated average annual gold production of 140,000oz in the first four years, with 1.14Moz produced across the life of the mine. The company said the project’s operational workforce would peak at 350 full-time jobs, with up to 250 workers involved during the 18-month construction phase — this latter workforce would be housed in an accommodation facility in Katanning.