Crocodile Gold purchased its assets from GBS Gold Australia Pty Ltd, a subsidiary of GBS Gold International Inc., in liquidation, on June 19, 2009 for a total purchase price of AUS$50 million (approximately C$40 million), payable in installments over a 12 month period.
GBS Gold owned and operated the Burnside and Tom's Gully projects, which includes processing plants at Union Reefs (2.4 mtpy) and Tom's Gully (240,000 tpy). They commenced operations in September 2006. GBS Gold ceased mining operations in September 2008 upon the appointment of administrators due to a lack of working capital. Annualized production prior to receivership was 140,000 ounces of gold at a cash cost of US$610/oz (at US$:AUS$1.25).
Crocodile Gold has formed a strategic operating plan to better realize the value of the assets. This plan includes the following key points among others:
- Exploration spending will be maintained to continue to grow the overall resource but also to ensure that sufficient mineable reserves are available to sustain and/or grow production levels.
- Focusing on the large, critical mass resource areas such as the Cosmo/Howley corridor in our land package that will form the majority of production over the next 10 years and moving these forward.
- Recruiting a first class team with key site people including the COO living in Darwin, Australia close to production and exploration, with the CEO, CFO and IR in Canada close to capital markets and investors.
- Being adequately capitalized to grow and sustain production levels.
- Efficiently operating our mines by working safely, protecting the environment, monitoring grade control, dilution control and using the right equipment and manpower.
- Implementing cost control measures, including financial reporting on each site to ensure profitability and procurement to manage costs.