LIHIR Gold Ltd (LGL) has entered into an agreement with Castlemaine Goldfields Ltd for the sale of the Ballarat project in Victoria, Australia.
LGL will receive A$4.5 million (K11.16 million) in cash plus an additional 2.5% royalty interest (calculated on net smelter return) in future production, capped at A$50 million (K124 million).
The sale is subject to certain conditions, including Castlemaine shareholders approving the issue of new equity to raise a minimum of A$20 million (K49 million).
Castlemaine has indicated it intends to take the Ballarat operation forward as an exploration project and will cease mining and processing for the immediate future.
In preparation for the transition to new ownership, the operation will wind down and placed on care and maintenance starting last Friday.
Redundancies would be offered to affected employees.
LGL will provide full entitlements and support services to employees and their families, including outplacement assistance.