13/02/2017 - 14:52

Westgold touts $80m project sale

13/02/2017 - 14:52

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Metals X spin-off Westgold Resources has entered into a toll processing agreement with Canadian company RNC Minerals that comes with an option to sell its South Kalgoorlie operations for $80 million in cash and shares.

Westgold Resources managing director Peter Cook.

Metals X spin-off Westgold Resources has entered into a toll processing agreement with Canadian company RNC Minerals that comes with an option to sell its South Kalgoorlie operations for $80 million in cash and shares.

Under the agreement, Westgold has granted RNC access to half of its 1.2 million tonnes per annum Jubilee processing plant capacity for the processing of gold and nickel from its Beta Hunt mine, 30 kilometres south from Jubilee, on a three weeks on, three weeks off basis for a year.

RNC will pay Westgold toll processing fees on a fixed plus variable arrangement, with Westgold to also receive $4 million in RNC shares.

RNC has also received a six-month option period to outright purchase Westgold’s South Kalgoorlie operations for $80 million.

Westgold said if accepted, it intended to receive a consideration in a mix of cash and shares that would give it a 19.9 per cent stake in RNC.

The deal excludes Westgold’s lithium mining and royalty interests over the Mt Marion lithium project.

Westgold managing director Peter Cook said the deal, if completed, would aggregate key assets in the Kalgoorlie region into one common owner providing for lower overall costs and opportunities for both companies.

“Westgold retains its ability to finalise and complete its current mining agreement on Cannon and retain its valuable lithium royalty interests,” Mr Cook said.

“Should the option be exercised, the aggregate asset portfolio significantly expands South Kalgoorlie with the potential for significant long-term low-cost gold production from RNC’s Beta Hunt mine.

“Our shareholders get both cash back and a retained interest in the project through its planned shareholding in RNC.”

Canaccord Genuity acted as financial adviser to Westgold, while Haywood Securities acted as financial adviser to RNC.

Westgold shares closed 0.8 per cent higher to $2.37 each.

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