Westgold Resources has signed an agreement to sell its Higginsville Gold Operations (HGO) to RNC Minerals in a deal valued at $50m.
As part of the deal, which will combine the Beta Hunt gold operations and HGO, Westgold will sell its wholly-owned subsidiaries which own the assets and tenements that make up the HGO in exchange for $25m in cash and $25m in RNC shares.
Under the option agreement, RNC will pay $4m of the $25m in shares to Westgold as a non-refundable deposit for an exclusive period of 40 days.
Westgold managing director Peter Cook said: “This is a sensible transaction that gives both RNC and Westgold solutions for their project needs.
“The addition of the ‘bonanza grade’ gold discoveries and resource potential at Beta Hunt to the existing operation at Higginsville will provide enhanced gold output at lower costs, as well as security from ownership of substantial plant and infrastructure.”
With the acquisition of the Higginsville operations and its low cost 1.3 million tonnes per annum (Mtpa) gold mill, RNC claims it will be able to unlock significant potential at its Beta Hunt gold mine.
The Higginsville mill will also add an expected 40,000-45,000oz of gold production this year.
HGO has a 367,000oz reserve within a 1.2 million ounce measured and indicated gold resource, and a further 0.9 million ounce inferred resource located on a 386km² land position in the Kalgoorlie gold region.
RNC Minerals president and CEO Mark Selby said: “The combination of the Higginsville Mill with the production potential of our Beta Hunt mine provide significant synergies, underpinned by the 35% per tonne cost saving or in excess of $100/oz versus our current toll milling arrangements.
“The transaction would transform RNC’s gold operation in Western Australia to a multi-mine operation anchored by the 1.3 Mtpa HGO Mill, the exciting high grade and substantial resource potential at Beta Hunt, and a large land position in the Kalgoorlie gold region.”
The proposed transaction is subject to execution of a definitive purchase agreement, satisfactory due diligence by RNC, TSX approval and Australian regulatory approval.
Earlier this month, Westgold reached an agreement to divest its South Kalgoorlie operations in Western Australia to Northern Star Resources for $62.45m.