LIHIR Gold has struck a deal to sell its failed Ballarat gold project in Victoria state to Castlemaine Goldfields.

Castlemaine will pay Lihir $4.5 million in cash plus a 2.5 per cent royalty on future production from the mine, capped at $50m.

Lihir acquired Ballarat in a $350m all-share takeover in 2007 but the mine failed to live up to expectations. The company put it up for sale in July last year and booked an impairment charge of $US409m in August.

Castlemaine plans to cease mining and processing at Ballarat and to take it forward as an exploration project, Lihir said.

As a result, Lihir said the operation is to be wound down and placed on care and maintenance from Friday, with redundancies to be offered to affected employees.
 

Source: The Australian