Crescent Gold buys projects from Barrick, Carbon Energy

Although Crescent Gold‘s (CRA-T, CRE-A) Barnicoat mill in Laverton, Western Australia, will remain on care and maintenance, the company is buying up nearby land packages with a production plan in mind.

Crescent has signed an agreement with Barrick Gold (ABX-T, ABX-N) and Carbon Energy (CNX-A) to pay $7.2 million for the Laverton Exploration Joint Venture, the Chatterbox and Beasley Creek gold deposits and a 100% interest in the Lancefield deposit. If future production from the deposits exceeds 75,000 oz. gold, Crescent will have to pay Barrick and Carbon Energy another $1.4 million apiece through a combination of cash and shares yet to be negotiated.

The purchase includes total resources of 1.1 million oz. gold (measured, indicated and inferred categories), about half of which is contained in shallow oxide deposits. These extra oz. double Crescent’s gold resources to 2.1 million oz. gold.

Crescent says the land its acquiring helps consolidate both ownership and management of projects in the area. The company’s already-owned Laverton gold project extends over 1,000 sq. km of various mining, exploration and prospecting licenses. There are several dozen historic shaft and open pit mines and Crescent says it has six gold deposits ready for production and another 10 deposits for which mineral resources have been defined and are being continuously developed.

Crecent put the Laverton project into production in March 2007, but then put the project on care and maintenance by summer 2008 because costs were running too high at the mill. The company couldn’t get the 1.5-million-tonne-year plant up to speed, despite new crushing equipment and mill modifications. To make up for it, the company sought out another way to make money from its ore with the help of neighbour Barrick.

Barrick has agreed to buy 1.8 million tonnes of Crescent ore, to be processed at its Granny Smith Mill, also in Laverton. Crescent says it’s on track to begin processing ore at Granny Smith by December. The company has signed a contract with a haulage company that will begin transporting ore to Granny Smith sometime in September.

Crescent also says its latest acquisitions could provide some operational and development synergies for selling more ore to Barrick that would fit in with the recent agreement.

Crescent shares were up 88% in Toronto, or 7¢ apiece, to 15¢ by mid-day on a trading volume of 594,000 shares.