Previously held by Denehurst Ltd, the mine produced copper and zinc from the Wilga deposit between 1992 and 1996 but was put on care and maintenance because of disappointing mill performance and rock bottom zinc prices.

It was announced in 1997 to the ASX that Denehurst would sell the underground operation to Benambra Minerals NL for a price of $3 million, but administrators failed to close the deal and the mine became tangled in litigation.

Austminex was the first cab off the rank when litigation was resolved and now holds an option to purchase the mine for $535,000.

The company’s IPO closed oversubscribed on Friday, raising $8 million. Underwritten by Wilson HTM Corporate Services Ltd, the company plans to list around September 14.

The Lion Selection Group Limited invested $2.5 million in convertible notes and committed to $2.5 million of the IPO.

Prior to pursuing listing, Austminex operated as a private exploration company, mainly in base metals. It is with this experience Austminex plans to turn the Benambra mine around and get it back into production by September next year.

“The guys on board have a solid background in base metals,” Austminex’s managing director Kevin Tomlinson said.

“We have exploration projects in the Lachlan Fold Belt of New South Wales Belt, so we bought into Benambra with the attention of creating a bit of cash flow for exploration.”

The first issue to be addressed after completing a Wilga Mine re-opening study will be refurbishing and updating the Benambra ore treatment plant.

“We plan to pump $2 million into automating and optimising the mill for zinc, which will probably take four months to complete,” Tomlinson said.

“Previously, Denehurst had added bits on to the mill to optimise it for copper production, but metallurgicaly they could never get the mill to work.”

A review of the processing plant by Slattery and Associates found the mill could be capable of producing recovery rates of 75% zinc to a concentrate assaying 50% zinc. It also found there was scope for the mill to reduce operating costs by 25% to $15 per tonne based on a 300,000t per annum throughput.

The current zinc price is $500/t more than when the mine was operating in 1996 at $1950/t.

The Wilga deposit contains a resource of 1.7 million tonnes at 1.9% copper and 7% zinc, with developed underground decline access, associated ventilation development and mine workings.

Tomlinson said Austminex was planning to examine alternative mine methods in the future.

The Currawong deposit, about 3.5km along strike from Wilga, contains 9.49Mt at 1.85% copper and 3.87% zinc.

“We estimate we would have to build a 500m decline to reach the Currawong deposit,” Tomlinson said.

“For now we will concentrate on the Wilga deposit to get a bit of cash flow in place.

“Then we can start looking at developing Currawong and exploring our other tenements.”

Tomlinson said the higher-grade zones already defined within the residual Wilga resource and the larger Currawong resource would sufficiently support a 10-year mine life.