Miner gets $82m boost to purchase Blackwater

An Australian-listed company has secured $82 million of funding to buy a West Coast gold mine.

Federation Mining was granted a $15m Provincial Growth Fund loan and $50m from Australian Super in 2019 to revive the historic Blackwater gold mine near Reefton.

It has all relevant consents, and is expected to soon announce whether it will go into production to extract 700,000 ounces of gold from the site. With gold prices reaching almost $4000 an ounce, the deposit is worth more than $2.7 billion.

Federation Mining vice president Simon Delander said AustralianSuper had agreed to fund another A$75m (NZ$82m) through the issuing of a convertible note – a loan that converts to shares in the next fundraising round.

AustralianSuper, Australia’s largest superannuation fund, had been a strong supporter of the project and a valued foundation investor, he said.

The funds would allow the company to buy the West Coast mine from OceanaGold, continue developing it, and complete the process plant engineering, Delander said.

The company had entered into a sales and purchase agreement with OceanaGold, which was subject to review and approval by New Zealand Petroleum & Minerals (NZP&M). If approved, Federation would own the mine and the permit would be in its name.

“The company acknowledges the support and stewardship of OceanaGold over the past six years as Federation has developed the Snowy River Mine.”

Federation Mining has completed a pre-feasibility study, which is being shared with potential investors, NZP&M and AustralianSuper. It previously said an announcement on production would come after the study.

Delander said the company was now seeking funding to pay for the construction of the processing plant.

“If all goes to plan, we would see production in late 2025.”

Snowy River Mine currently employs over 60 staff and contractors. The construction and operations phases would provide for another 100 or more employees, with positive flow-on effects in the West Coast community, Delander said.

It has already drilled two new 3.3km tunnels from private land into the historic workings, and has paid off the $15m government loan that kick-started the project.