LIHIR Gold has finally offloaded its troubled Ballarat mine after reaching an agreement with Castlemaine Goldfields to sell the asset for a paltry $4.5 million plus royalties.
But the move has angered unions with Lihir's 90 employees to be offered redundancies.
The romanticism with which Lihir pursued its vision of a ''Victorian gold renaissance'' turned sour in July when it was forced to abandon the project, cut hundreds of jobs and write down $US409 million ($A454 million). The misadventure claimed the scalp of chief executive Arthur Hood after many in the market had criticised his management style.
Castlemaine said it would cease mining and processing ''for the immediate future'' and offer redundancies to affected employees.
Managing director Gary Scanlan said he was hopeful of ''re-employing local personnel and re-engaging local contractors'' who lost their jobs last year. He expects about 100 jobs to be created once the project is back up and running.
He said the gold producer would ''get the keys'' in early May before conducting exploration and development work. Until then the mine will be put on care and maintenance.
''We expect production to start about 18 months after we get in there,'' Mr Scanlan said. ''I view it as us acquiring an exploration project, but with first-class facilities, and we are getting that for only $4.5 million plus royalties.''
A trading halt will be in place for 48 hours as Castlemaine seeks to raise between $20 million and $40 million by way of a placement to institutional investors. It is expected to update the market late on Monday.
Castlemaine aims to produce 50,000 ounces a year by exploiting the northern end of the field, which is said to be where the greatest potential is. Lihir held similar views, expecting Ballarat to be a 150,000-ounces-a-year gold project. However, it is producing less than 20,000 ounces. Lihir took the mine over in 2007 under a $350 million friendly merger with Ballarat Goldfields.
In December, BusinessDay reported that Lihir was unlikely to get any more than $10 million for Ballarat from the six interested parties.
The sale, including the 2.5 per cent royalty interest which is capped at $50 million, is contingent on the capital raising going through.
AWU Victorian secretary, Cesar Melham, said the deal was ''a betrayal to the workers and a betrayal to Ballarat''.
''I am really upset for the workers who came to Victoria after being promised the world,'' he said.
''We had high expectations for the workers at Ballarat and now Lihir is packing up its bags and walking back to Papua New Guinea and Africa.''
Lihir says it will provide full entitlements and support services to employees and their families.
With AAP
