Ferrex to buy Australian gold mining company Chaffers

AIM-listed resource development group Ferrex has agreed to acquire Australian private company Chaffers Mining, which has a five-year agreement to mine certain defined gold deposits located on the Norton leases north of Kalfgoorie in the Western Australian goldfields.

Ferrex said the deal will enable it to begin production and cash generation with only £300,000 working capital expenditure in the second quarter of next year.

The company said gold production will commence at 20,000 to 30,000 ounces per year, the cash flows from which will be used towards the development of the Nayega manganese project in Togo when the permit is received.

Managing director Dave Reeves said: “It is very rare to find an opportunity which can deliver production in under six months from acquisition and therefore I am personally very excited about this project, which fits our goal of rapidly delivering cash flow at a low cost.

“With our focus firmly on producing cash from these gold assets for the next six to nine months, I have no reason to believe that the Nayega permit will not be fully granted when we have the time to turn our attention to developing this as our next cash producing asset.”

No financial details were disclosed.

At 1045 GMT, Ferrex shares were up 1.9% at 0.46p.