Westgold Resources (TSX: WGX) has entered into an agreement to sell its Lakewood Milling Operation, which is found to the north of its Beta Hunt operations in Western Australia. The operation is to be sold to ASX-listed Black Cat Syndicate in a transaction valued at $85 million.
The transaction will see the 1.2 million tonne per annum operating facility taken over by Black Cat in support of the development of the Kal East project, which has a production target of 381,000 ounces a year. As part of the transaction, Westgold will retain optionality and priority access to up to 200,000 tonnes per annum of processing capacity via a toll-treating agreement. That toll agreement has an initial period of two years.
Consideration for the asset will consist of $70 million in cash in staged payments that will take place over a nine month period, as well as $15 million in Black Cat shares. Black Cat will also assume $8 million in rehabilitation liabilities as part of the transaction.
The sale is part of a strategy that will see the Higginsville mill expanded in an effort to support expanded production from the Beta Hunt mine. An ongoing expansion study is evaluating a range of options for the Higginsville mill, with the expanded operation to be anywhere from 2.6 million to 4.0 million tonnes in size. Results from that study are due to be released in March.
Westgold acquired the Lakewood facilities in 2022 for $80 million in 2022, with consideration consisting of $70 million in cash and $10 million in shares.
Westgold last traded at $2.21 on the TSX.
Information for this story was found via Sedar and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
