Lihir Gold may have finally freed itself from the very expensive mistake on the Ballarat goldfield in Victoria that has cost it more than $400 million.
The end of this expensive disaster will come when the would-be-buyer, Castlemaine Gold, raises around $20 million in a share issue which started Friday after the sale deal was revealed.
Lihir said on Friday it proposed to sell the project to Castlemaine Goldfields for just $4.5 million cash and royalties capped at a maximum $50 million.
The sale is subject to conditions, including Castlemaine shareholders approving the issue of new equity to raise a minimum of $20 million.
Lihir said on Friday the operation would be wound down and redundancies offered.
Lihir said in its recent annual result that it had taken a one-off charge of $413 million after-tax, "being the impairment charge and operating losses from the discontinued Ballarat operation".
"Castlemaine has indicated it intends to take the Ballarat operation forward as an exploration project, and will therefore cease mining and processing for the immediate future," Lihir said in its statement.
"In preparation for the transition to new ownership, the operation will be wound down and placed on care and maintenance from today.
"Redundancies will be offered to affected employees.
"LGL will provide full entitlements and support services to employees and their families, including outplacement assistance," it said.
Castlemaine Goldfields said the acquisition presents it "with the opportunity to create significant value for shareholders through the consideration of operations to two historically prolific Victorian Goldfields".
The company said that following the completion of the sale, it would follow a defined strategy to target the northern compartments of the field.
Castlemaine said on Friday that it was "announcing its intention to raise between A$20m and A$40m in new equity by way of placement to institutions and sophisticated investors to complete the acquisition and provide additional funding.
"CGT is aiming to identify sufficient resources to recommence development and production, targeting a 50,000 oz per annum operation. This would present an opportunity to re-employ local personnel and re-engage local contractors."
Lihir Gold shares fell 3c to $2.91. Castlemaine (CGT) shares last traded at 40c before going into a trading halt on Friday.
