Kingsrose strikes royalty deal on Way Linggo gold/silver project

Australia-exchange listed firm Kingsrose Mining Limited (KML) has reached agreement with Aurora Gold Limited (AGL), to relinquish and terminate AGL?s right to receive a 1.85% net smelter return royalty (capped at US$3.5m) on gold and silver production from KML?s 85% owned Way Linggo gold/silver project in Lampung province.

In exchange, KML will allot AGL 1,500,000 ordinary shares pursuant to its 15% placement facility and pay US$250,000 by 31 October 2010, KML said in a statement filed with the Australian Stock Exchange on Thursday.

The company is also in managing its working capital requirements, Kingsrose has negotiated to extend the maturity date on A$2.2m in unsecured loans from 30 September to 31 December 2010.

Last month, KML poured its first bars at the Way Linggo gold/silver project

The four bars of dore weighing a total of 5.9kg (a mix of gold and silver) represent the culmination of a 12 month mine development and plant construction phase costing US$12 million.

Annual output is expected to be at an initial rate of 45,000 ounces of gold at a cash cost of $147 an ounce which is more than $1000 per ounce lower than the current world gold price, it said.

AGL is a wholly owned subsidiary of Harmony Gold Mining Co Limited. (giok)