Monarch Gold ready to roll19/03/2008 By: Zachary CoronesMonarch...

Monarch Gold ready to roll
19/03/2008 By: Zachary Corones

Monarch Gold Mining Company Limited (MON) said it was well advanced with arrangements for the $65 million acquisition of the Mount Magnet Gold Operations project. The Gold explorer said it expects to hit the ground running with its exploration and optimisation activity when it takes possession next month.
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Monarch announced the acquisition of the project, which includes the Hill 50 mine, from Harmony Gold Mining in November last year and will take possession on 1 April 2008.

The purchase process is due for settlement on 30 June 2008, Monarch said in a statement to the ASX.

The $65 million purchase price included a $30 million cash component, with $5 million already paid on signing, and $11 million to be funded through Environmental bonds, the company said.

“The balance as previously announced will be $20 million in equity and $15 million in convertible notes,” Monarch explained.

Chairman Michael Kiernan added that the company expects to yield $5 million cash from the sale of surplus assets including a surplus ball mill, excess housing infrastructure, motor vehicles and non-core plant and spares.

“This will leave Monarch to raise less than $10 million in equity to complete the Mount Magnet acquisition in June,” Mr Kiernan said.

“Despite capital and credit markets changing substantially in recent times, we believe the fundamentals of the project, including the strength in the gold market, make a compelling investment case.”

The Mt Magnet asset package comprises of a resource inventory of 2.7 million ounces of gold, tenements covering approximately 1,100 square kilometres, along with a 2.7mtpa capacity plant.

The company said it intends to put the Hill 50 mine on care-and-maintenance for up to two years, while the focus is on exploration activities.

“We have budgeted for a full year exploration program of $10 million,” Mr Kiernan said.

“Drilling is due to commence in May on the most prospective advanced projects including the Galaxy ‘Big Pit’ concept.”

Monarch said it was confident 2008 would be a strong year for an unhedged gold and bank debt free producer with exposure to the robust gold price.

Shares in Monarch Gold finished trading yesterday unchanged at 47.0c.