Westgold Resources is acquiring 100 per cent of Karora Resources, in doing so bringing Karora’s Beta Hunt gold mine into the fray.
Westgold managing director and chief executive officer (CEO) Wayne Bramwell said the Beta Hunt mine was “the prize”, given its current production profile and growth potential.
“Rarely do you find a gold asset of the quality and potential of Beta Hunt hiding in a nickel belt and drilling is expected to further unlock value at this mine,” he said.
“This merger brings Beta Hunt together with Big Bell, the emerging Bluebird and the iconic Great Fingall mine under one Australian management team.
“These assets combined create the foundations of a new Australian gold mining powerhouse that is focused on free cash generation, is internationally relevant and investable and can stand head and shoulders alongside the biggest names in the Australian gold sector.”
Bramwell said the new company had a “dominant” footprint across two historic but under-explored goldfields, being the Murchison and Bryah regions of WA.
Karora is targeting 2024 gold production of 170,000–185,000 ounces per annum (oz) at an all-in sustaining cost (AISC) of $US1250–1375/oz from Beta Hunt and its Higginsville gold operations.
Westgold produces about 220,000–230,000oz of gold per year from its various operations.
Karora shareholders will receive 2.524 Westgold shares, $0.68 per share in cash and 0.30 of a share of a new company that will be demerged from Karora, called ‘SpinCo’.
The offer is valued at about $6.60 per Karora share based on Westgold’s closing share price of $2.28 per share on April 5.
SpinCo’s assets will comprise Karora’s 22.1 per cent stake in lithium explorer Kali Metals, a one per cent lithium royalty on certain Kali mining interests, potential future payments related to the sale of the Dumont asset and $6 million in cash.
Karora chair and CEO Paul Huet said the deal made sense.
“The merger is estimated to unlock approximately $490 million of operational, G&A (general and administrative) and capex (capital expenditure) synergies while shareholders will become proud owners of the largest unhedged gold producer in Australia at completion of the transaction – certainly a compelling opportunity in the current gold price environment,” he said.
Westgold shareholders will own 50.1 per cent of the enlarged entity, with Karora shareholders owning the balance.
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