Thank you for joining today's teleconference for the Mount Gibson Iron announcement of its agreement to acquire a 50% interest in the Central Tanami Gold Project. Mount Gibson Chief Executive Officer Peter Kerr will be leading the discussion and is joined by Chief Financial Officer Jill Dobson and External Relations Manager John Phaceas. Mr. Kerr will provide a brief overview, after which there will be an opportunity to ask questions. Due to time constraints, only institutional participants will be invited to ask questions at that time. A recording of the call will also be available via the Mount Gibson website shortly after completion of today's teleconference. Thank you and go ahead. Thanks, Peter.
Thanks, Lisa, and good morning everyone, and thanks for joining us to discuss an exciting opportunity for Mount Gibson Iron, being the acquisition of a 50% interest in the advanced Central Tanami Gold Project and an adjacent large exploration landholding from Northern Star Resources Limited. I'll give a brief overview before handing back to Lisa for any questions from the floor. Just as a reminder, all currency we mention on this call is denominated in Australian dollars unless otherwise stated. As you'd be aware, this morning Mount Gibson Iron announced what we anticipate will be the first of a number of new investments to take our business forward as our existing primary operation, the Koolan Island iron ore mine in the Kimberley, heads into its final 18 months of mine life.
With that in mind, for some time now, Mount Gibson Iron has been seeking to diversify into other conventional commodities, which have both positive long-term fundamentals and which are not largely dependent on a single country market. Following negotiations over the last few months, we've now reached agreement to acquire from Northern Star its 50% interest in the Central Tanami joint venture, as well as Northern Star's portfolio of wholly owned exploration tenements in the region for AUD 50 million in cash. It's an opportunistic transaction for us to enter the gold sector for an attractive price as the first step in creating a gold production business and ultimately establishing Mount Gibson Iron as a diversified minerals producer.
This opportunity has arisen as the seller, Northern Star, has recently added substantially to its business, as we'll all be aware, such that the Central Tanami project, while an attractive asset, is no longer of sufficient size for Northern Star's production base. Hence our engagement with Northern Star earlier this year and the acquisition transaction that's been announced today. What are we acquiring? Firstly, we're buying a half interest in one of Australia's largest and highest grade undeveloped gold projects, and it's set in one of the country's productive but still largely unexplored gold provinces, the Central Tanami region in the Northern Territory. The Central Tanami Gold Project.
You are now in a subconference. Line unmuted.
Can I just ask which company you're representing today?
Hey David, you're just in a subconference. Can I just ask which company you're representing?
You are now in the main conference. Line muted.
Four estimates, which have been reported by the current JV party since that JV was formed in 2015. The total gold inventory exceeds 2.6 million ounces, with an average grade of 3.2 grams per tonne gold. While work is underway to update the historic estimate component to current standards, the rules require, as you will have seen in our release, that we must point out that a competent person has not yet completed sufficient work to classify those historical estimates in accordance with JORC 2012, and it's uncertain that following further evaluation work that they'll be able to do so. Positively, the vast majority of the reported JORC 2012 mineral resources, as well as the historical estimates, are located on granted mining leases, often where there has been previous mining disturbance, and that provides a shorter pathway to a development decision.
In addition to the significant gold inventory, the Central Tanami Gold Project JV owns a non-operating 1.2 million tonne per annum carbon-in-leach processing plant, which has not operated since 2005, so it does need refurbishment, but it presents an advantageous option for fast track to production. In addition, other substantial infrastructure includes an accommodation camp, a 1.4km gravel airstrip, sealed and unsealed mine haul roads, and a water bore field. The project is also advanced from a technical perspective with an extensive database of technical exploration and mining information, including from a range of past scoping and feasibility-related activities, which provide a solid base from which to accelerate development studies from here forward.
Given its advanced state, significant resource base, and exploration prospectivity, we believe there exists strong potential to advance the project towards a development decision within 12 - 18 months, and I'll go into that in a bit more detail shortly. In addition, Mount Gibson Iron will also be acquiring a further 3,600 square kilometers of exploration tenements in the region, which are wholly owned by Northern Star Resources Limited. Together with the Tanami joint venture interest, this will give Mount Gibson Iron a dominant land position exceeding 5,000 square kilometers in a productive gold region. Turning to the transaction we've announced today, we think this is an attractive opportunity for a number of reasons.
Firstly, we obviously like the assets for the reasons outlined already, and in particular, we think that the existing infrastructure, although it obviously requires upgrades given the period of time since this site was last in active production, as well as the existing granted mining leases, which host the vast majority of the mineral resources, offer an attractive asset package. Secondly, being opportunistic and having the financial capability to engage with Northern Star, the purchase price we're paying is compelling from our perspective, from a value perspective, when benchmarked against other transactions and considering that the average grade of the mineral resources being acquired is high.
At AUD 50 million, our 50% interest in the current JORC 2012 mineral resources equates to the equivalent of around AUD 61 per ounce of contained gold, and if we also then factor in the additional approximately 1 million ounces of the historic estimates, that overall cost drops to around AUD 38 per ounce of contained gold, and they are attractive metrics. Thirdly, both Northern Star and Tanami Gold have done very good work in advancing the resource definition and scoping aspects of the project to date. Our view is that going forward, the project will benefit from two parties that are more closely aligned in their development criteria and objectives. We therefore intend to work actively with Tanami Gold to seek to fast track the project to a development decision within the next 12- 18 months, as I've mentioned.
It should also be noted that Mount Gibson Iron and Tanami Gold have a common major shareholder, as I'm sure many are aware, in Hong Kong Stock Exchange listed mining investment firm APAC Resources, which I'd like to think is a positive for being able to promptly progress towards development of the project. How do we see the project moving ahead? We obviously can't say or do much until we actually complete the transaction and effectively get the keys. However, we're fully supportive of the underlying strategy of the existing JV partners towards development. For some time, they've been working on a development plan focused on initial production from three main deposits, and they're named Ground Rush, Ripcord, and Jims, and together they have a current JORC 2012 mineral resource of around 1.3 million ounces.
Ground Rush, which produced over 600,000 ounces from an open pit at an average grade of 4 grams per tonne of gold, or Newmont between 2001 and 2005, has resources of just over 1.1 million ounces at an average grade of 4.3 grams per tonne of gold. While the JV's been carrying out ongoing technical work to better define the optimum mining and processing scenarios for the project, it's also been generating solid, if unsung, results from infill and extensional drilling at key targets around these other deposits, which will ultimately influence this evaluation work. A key part of the ongoing development assessment work will also involve an updated engineering review of the existing processing plant to better define the optimum scenario, specifically whether that would be refurbishment, a new build, or a combination of both as the best way forward.
There is also ongoing work to support efforts to move more resources from the inferred category to the measured and indicated categories, which assists, obviously, with a development decision. We support efforts to move things forward under the Central Tanami Gold Project JV and have the financial capacity to do so, and we look forward to completing the acquisition and working with Tanami Gold to move the project forward as promptly as possible. What are the next steps? From here, our immediate focus will be on satisfying the conditions required to complete the transaction, and they're obviously listed in today's announcement and must be done by March 31 next year. The conditions comprise, and they're really four key ones.
Firstly, approval of the Foreign Investment Review Board, for which we've already submitted an application, and that approval is required given that APAC Resources, as I mentioned, holds over 20% of the issued shares of Mount Gibson Iron. Secondly, receipt of a further extension from the Central Land Council of the existing infrastructure arrangements on one of the tenements. That's an extension that's been granted a number of times previously, and we're seeking for that to be refreshed. Thirdly, non-exercise by Tanami Gold of its right of first refusal under the terms of the joint venture, and that's for obvious reason, and then a range of lesser pre-completion conditions typical for this type of transaction.
Once these conditions are satisfied, we will pay the AUD 50 million purchase price, and there will also be some typical adjustments for any cash, debt, and working capital in the acquired entity at that completion time. We will also replace AUD 5.8 million of existing vent guarantees, which we can do under Mount Gibson's existing performance bonding facility. During the pre-completion period, Northern Star will continue to progress the joint venture's activities in line with its approved work program and budget for 2025, so that time is not lost. Northern Star is responsible for the first AUD 3 million of its share of joint venture expenditure during this period, and Mount Gibson will, on completion, reimburse Northern Star for amounts incurred above that level. Before we close, I just wanted to comment finally regarding the company's overall investment and acquisition strategy.
We've obviously been searching for some time to diversify within the business as we progress towards the end of the Koolan Island mine life. There's a bit to go with Koolan in the next 12- 18 months, and we'll be releasing to the market shortly our longer-term plans for that operation. We see today's acquisition as complementary to that strategy, specifically as a first step in establishing a precious metals production business while continuing our parallel efforts to build a presence in the base metals sector, notably in copper. As we've previously disclosed, we already hold positions in aggregate totaling over AUD 20 million in a number of junior resources companies, which we believe present potential future financing, partnering, or acquisition opportunities for Mount Gibson. Ultimately, we're seeking to transition from a single commodity producer with a relatively short-life asset at Koolan Island to a long-life, diversified, multi-commodity producer.
On that note, I'd like to finish by thanking my colleagues and the small group of technical, financial, and legal personnel who have assisted and worked on this and supported us in this transaction. With that, Lisa, I'll now hand back to you for any questions that anyone may have. Thanks.
Thank you, Peter. If anybody would like to ask a question, please press star one on your phone now, and you will be placed in a queue. Press star one on your phone. Okay, thank you. We do have a question from Chris Christoffy. Go ahead, please, Chris.
Hi, I just wanted to ask a different topic. What's happening with the buyback? Because we are in a major shortage.
Sure, Chris. We obviously have the share buyback programs still in place that run at this point through to September, and we're keen to continue that. We haven't been able to be active in the market for obvious reasons because of the information that we've had confidentially whilst we've progressed this transaction. We're now in a blackout period in the lead-up to the release of our full-year results. After that, we typically will enter a clear period, and so that will be, depending on where the share price is, the opportunity to recommence that buyback. Chris, did you get that answer?
Yep, sorry, thanks. I didn't know I could respond. Thank you.
Okay, thank you. No problem.
If anybody else would like to ask a question, please press star one on your phone now, and I do have Tom Zunalame. Go ahead, please.
Sorry, Tom Forman from Business News. You talked a bit there about the price, the 50 more price thing. You seemed at a good value. I guess how much did you look into that in terms of, you know, are we at the kind of peak of where gold is in a cycle at the moment? How much more legs do you think that there is in that sector in terms of the price?
Sure, Tom. In terms of the metrics of the price, you'll see in the presentation we've sought to try and explain that versus recent transactions over the last couple of years. I think it's an attractive price, and we've been very conscious that in looking at this project and assessing it, we haven't assumed that today's gold price will run forever. It may well do because the fundamentals actually look pretty strong, but we have been much more conservative in the way we've assessed the potential cash flows that could come from this project. That's where we sit. We've been conscious about making sure that we pay an attractive price. I think we've been able to secure that. Northern Star obviously also think they have obtained a fair deal, so I think that's a good outcome.
Going forward for the gold price, you know, we sit in a world where, and given my history with gold prior to iron ore, we sit in a world here where there's a fair amount of global risk around, and we could see an elevated USD and AUD price for gold for quite some time yet. Thank you.
Thanks, Tom. If anybody else would like to ask a question, star one on your phone now, please. Okay, Peter, we have no further questions.
Okay, thank you all for listening in this morning. A copy of this will go on our website and be available for people to listen to. If you do have any further questions or wish to engage with the management team, please give us a call. Happy to respond at any time. Have a good day. Thank you.