Former Morning Star Gold "stablemates" under Western Mining...

Former Morning Star Gold "stablemates" under Western Mining Corporation Sold ....Again!

Crocodile snaps up Victorian mines
by: Barry Fitzgerald. From: The Australian.

OWNERSHIP of Victoria's two biggest goldmines -- the Fosterville and Stawell mines -- has again been bounced from one Canadian gold company to another in a $C105 million ($101m) deal.

The seller was AuRico Gold, which picked up the two mines last year with its takeover of Canadian group Northgate. The mines were very much secondary assets in the Northgate acquisition and AuRico's intention to find another buyer for the two mines was well flagged.

The buyer is Toronto-listed Crocodile Gold, which is a gold producer from the Cosmo/Howley project in the Northern Territory (68,000oz last year). The Fosterville mine is 20km east of Bendigo and is forecast to produce as much as 95,000oz of gold this year at a cash cost of $US965 ($925) to $US995 an ounce. The Stawell mine is on the edge of the town of Stawell, northwest of Ballarat. It is forecast to produce as much as 85,000oz of gold this year at a cash cost of $US870 to $US900 an ounce.

Local interest in the two mines was limited by their relatively high cost status and a perception that their exploration upside potential was limited, particularly at Stawell.

Stawell was originally a Western Mining Corporation development. It has been in production for 27 years and in 2010 it produced its two millionth ounce of gold.

Completion of the acquisition for cash and shares by Crocodile sets it up to produce as much as 250,000oz from its Australian mines this year. The acquisition comes as Crocodile increases production at the Cosmo mine.

AuRico said the sale would allow it to focus on its North American operations. It becomes a shareholder in Crocodile as part of the consideration is $C10m in Crocodile shares.

AuRico's acquisition of Northgate last year had the Young-Davidson goldmine in Canada as its main prize. The mine is in ramp-up phase, on its way to annual production of more than 200,000oz of gold.

Crocodile is relying on an $80m credit facility being secured with Credit Suisse to complete the deal. A non-binding term sheet has been signed for the facility but details are not yet finalised. Should that fall over, Luxor Capital Group is to provide bridging facilities.
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