Ausgold reaches ‘agreement in principle’ with shire for 250-bed workers accommodation facility in Katanning

The company behind the $355 million Katanning gold project says it has reached “agreement in principle” with the local shire on a long-term lease for a 250-bed workers accommodation facility on the edge of the Great Southern town. Ausgold told the Australian Securities Exchange on Thursday the agreement in principle did not constitute a binding agreement, with the signing of lease documentation remaining subject to council approval after the issuing of a public notice advertising the shire’s intent to enter into the lease with Ausgold. The site of the proposed facility is an 8ha block of shire-owned land at the north-western entrance of the town on Great Southern Highway between Henry and Crosby streets, with parking facilities on the northern side of Henry Street. The company said the site was selected in consultation with the shire based on the agreed mutual benefits of locating the accommodation facility on the outskirts of town rather than at the mine itself, which is at Badgebup, 40km to the north-east. Ausgold said it would operate buses to transport staff between the mine and the accommodation facility. The company said the proposed lease was for 12 years, starting on January 1 next year, with two five-year extension options. It said it would pay market rates as determined by an independent valuer. The company said upon termination of the lease the shire would have the option of retaining the facility, in which case ownership would vest in the shire. Ausgold executive chairman John Dorward said the company was pleased with the support it had received from the Shire of Katanning. “It is through collaborations like this with our local partners that we seek to ensure that the Katanning gold project delivers tangible long-term benefits for all stakeholders,” he said. Ausgold this week started a 44,000m reverse circulation and diamond drilling campaign with the aim of growing the project’s 2.4-million-ounce resource ahead of a final investment decision in the middle of next year. The company this month paid $3m for 240ha of farming land to be added to the project. This followed a deal in August involving 860ha acquired for $35m that also ended long-running legal action and included compensation for the relocation of the four families who occupied the land. A definitive feasibility study released in June 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.