Stirling Resources Limited (ASX:SRE)
Perth, June 23, 2009 AEST (ABN Newswire) - Stirling Resources Limited (ASX:SRE) today announced it had reached an agreement with Administrators Pitcher Partners to inject funds into Monarch Gold Mining Limited (subject to Deed of Company Arrangement) (ASX:MON) to fund the recommencement of operations at the Davyhurst and Mt Ida gold projects located in the Western Australian Goldfields.
Stirling will provide the capital through wholly-owned subsidiary, Stirling Gold Pty Ltd and the agreement will ensure all Monarch creditors and debt providers receive 100 cents in the dollar, being a total payout of A$55 million, based upon creditor figures provided by the Administrator.
In July 2008, Monarch Gold was placed in voluntary administration due to the continued underperforming of the Davyhurst open pit mine.
However with the strong rise in the gold price over recent times the previous cash negative operations of Davyhurst would now deliver a healthy cash margin.
Managing Director Michael Kiernan said the aim was to recommence the operations as soon as possible, ahead of a proposed name change and re-listing on the ASX.
Stirling Resources have undertaken an extensive A$250,000 mine study which included reassessing, reviewing, mine planning including metallurgical, engineering and geological analysis.
Mr Kiernan said Mt Ida was targeted to produce 48,000 ounces per year at a projected cash cost of A$450/oz and Davyhurst which was intended to be re-commissioned within three months of settlement with a production target of 65,000 ounces per year at a projected cost of A$850/oz.
"We had been determined to reach an agreement that enabled all creditors and debt providers to receive full payment and to see the Monarch corporate structure survive for the benefit of all existing shareholders together with ensuring a healthy return for Stirling Resources via dividends," Mr Kiernan said.
"Going forward, we propose to change the name to Swan Gold Mining Limited and re-list the company as soon as possible, focusing solely on the Mt Ida and Davyhurst operations."
Mr Kiernan said he expected Stirling Resources to ultimately hold in the order of 40% of Swan Gold Mining Limited. Equity funding for Swan Gold Mining is expected to be satisfied by Stirling Gold issuing a Commercial Bond to Austrian international commodity leader DCM DECOmetal, a major shareholder in Stirling Resources.
Mr Kiernan said Stirling Gold was well positioned to operate the gold assets, with a Board and management team having strong gold experience and specific knowledge of the Monarch projects.
Contact
Michael Kiernan
Managing Director
Tel: +61-8-6389-6800
Keith Vuleta
Chief Financial Officer
Tel: +61-8-6389-6800
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