Westgold Resources will enter a strategic alliance with Ora Mining to advance the development of its Crown Prince deposit in the Murchison region, as activity in the region heats up.
Westgold Resources will enter a strategic alliance with Ora Mining to advance the development of its Crown Prince deposit in the Murchison region, as activity in the region heats up.
The deal will see Westgold pay $6 million to take a 15 per cent stake in Ora, and team up on the development of Crown Prince – which sits 33km from the company’s Bluebird mill.
It gives Westgold a right to seat someone on the board of Ora and paves a path for the pair to establish an ore purchase agreement.
In a release to the ASX this morning, Ora labelled Westgold the dominant gold miner in the Murchison region and said the deal would provide a path to production.
“We are very pleased to announce the Westgold strategic alliance and placement, which provides a short and tangible pathway to production and cashflow from Crown Prince,” Ora chief executive Alex Passmore said.
“Ora and Westgold will work collaboratively over the next few months to define the development timetable.
“This alliance with a large regional operator with extensive processing infrastructure gives us strong confidence in the potential for future economic extraction of other advanced projects within our tenure.”
The placement is the latest in a suite of moves by Westgold to grow its gold footprint in Western Australia, most notably through its merger with Karora Resources which was yesterday referred by Ramelius Resources to the Takeovers Panel.
The combined Westgold-Karora entity to be created by the merger would produce more than 400,000 ounces of gold per annum.
In referring the deal, Ramelius – which earlier walked away from its own move for Karora – revealed it had entered a confidentiality deed with Westgold late last year.
No details were provided on the scope of those conversations.
Ramelius also has a presence in the Murchison through its acquisition of the undeveloped Cue gold project as part of its takeover of Musgrave Minerals late last year.
Ramelius trumped Westgold in its pursuit of Musgrave, with both companies lodging takeover offers for the company and the former winning board endorsement.
At the time, Ramelius said the Checkers mill at its Mt Magnet operations was the logical processing option for ore from Cue.
The plant at Bluebird is capable of processing 1.6-1.8 million tonnes per annum of ore and primarily sources its throughput from Westgold’s Bluebird underground mine, along with ore from the Big Bell mine and other surface stockpiles in the region.
Ora’s release noted the plant’s milling capacity could be ramped up to 2.2Mtpa of ore, using a blend of soft and hard material.
The deal appears to be a boon for the smaller company, which has a market capitalisation of just over $20 million. Westgold’s market cap sits above $1 billion.
Argonaut PCF is acting as a financial adviser and Thomson Geer as a legal adviser to Ora in its dealings with Westgold.
Shares in the Wayne Bramwell-led Westgold were trading 3 per cent higher this morning, at $2.36. Ora shares were up 37.5 per cent, to 0.5c.
