Subiaco-based Crescent Gold has extended an existing ore purchase agreement with global miner Barrick Gold by a further two years.
The new arrangement extends the deal to a four-year term, which Crescent managing director Roland Hill said made economic sense for both parties.
"The economies of scale to both Crescent and Barrick present a rare win-win opportunity," Mr Hill said.
"Through the OPA (ore purchase agreement) Crescent has access to a world-class processing facility with spare capacity, right on our doorstep. By selling on the ore from our Laverton operation instead of processing it ourselves, we are significantly reducing our input costs. At the same time Barrick gets to reduce its operating overheads through the economies of scale offered by higher mill throughput.
"The terms of the OPA are clear-cut and easily managed. The Agreement is working well for both Crescent and Barrick and demonstrates the confidence between the groups which has led to the extension.
"Laverton is a quality gold asset and the extended Agreement is an important step in our new strategy to extract shareholder value from this operation.
"Importantly, the extended OPA means the Company has greater processing options for a longer period of time and provides greater surety for our shareholders going forward," Mr Hill said.
Under the agreement, Crescent transports 650,000 tonnes of ore to Barrick for processing in each 50 day cycle, which equates to more than 100,000 ounces of gold per annum.
Shares in Crescent were unchanged at 16.5 cents at 11:29 AEST.