Gold and copper producer Doray Minerals has announced the sale of its Andy Well and Gnaweeda gold projects to Westgold Resources, in a cash and scrip deal worth $15 million.
The parties signed a binding term sheet, replacing a $10 million agreement by Doray with Galane Australia, which was announced in October last year, for the sale of Andy Well.
Galane terminated the agreement, citing necessary conditions not being met.
Under the terms of the agreement with Westgold, an upfront payment of $9 million will be made, including $2.5 million in cash and $6.5million in shares.
Three additional deferred payments of $2 million each will be linked to production milestones.
The Andy Well project is estimated to contain an underground mineral resource of over 500,000 ounces at 8.6 grams per tonne, and is located about 40 kilometres north of Meekatharra in the Central Murchison Region.
Doray indefinitely suspended production at the Andy Well project in November 2017 due to declining production profile and profit margin.
The Gnaweeda exploration project, which is located approximately 15 kilometres from the Andy Well processing facility, has a mineral resource of 322,000 ounces at 1.8 grams per tonne.
The transaction is expected to take place next month and is subject to completion of due diligence.
In November last year Doray entered into a merger agreement with Silver Lake Resources, and Doray said the term sheet with Westgold was approved by Silver Lake.
Doray Minerals managing director Leigh Junk said the company was delighted to have signed a with a well-regarded WA gold producer.
“We have full confidence in Westgold delivering future value for all stakeholders from Andy Well and Gnaweeda, which are complementary to their existing large-scale Murchison operations.”
Doray was advised in the divestment process by PCF Capital Group.
Shares in Doray were up 4.29 per cent to trade at 36 cents each at the close of trade.
