Westgold Resources (ASX: WGX) has topped up its coffers with 240,000 ounces of gold by entering a binding agreement with Ora Gold to purchase the ore at the Crown Prince deposit near the Western Australian town of Meekatharra for $6 million.
The deposit is set for a mineral resource update in September as preliminary project development and mining proposal workstreams progress. As part of a strategic placement, Ora will issue 1.3 million new shares at 45c to raise the $6 million and upon completion, Westgold will hold 18.7 per cent of Ora shares on an undiluted basis and 15 per cent on a fully-diluted basis.
Westgold will also have the right to a seat on the Ora board and an equity participation right. The pair will negotiate the terms of the ore purchase agreement, which is expected to grant Westgold first right of refusal with respect to future purchases of ore produced from any tenements owned by Ora – and which will be processed at Westgold’s Bluebird Mill at Meekatharra.
The Bluebird gold processing plant is just 33km south-east of Crown Prince, allowing easy and efficient haulage logistics. It is currently being fed by the Bluebird and Big Bell underground mines and has a capacity of about 1.6 to 1.8 million tonnes per annum (Mtpa) of hard ore and 2.2Mtpa of hard and soft blend.
Drilling in the south of Crown Prince threw up some head-turning gold assays earlier this year from a new area of mineralisation in the south-eastern zone.
Results from one hole went as high as 15m at 9.91 grams per tonne from 88m including 2m at a massive 54.17g/t from 100m and 5m going 6.6g/t from 31m. Another hole gave up 1m at 8.67g/t, while yet another went 4m at 1.72g/t gold.
The results will feed into the September’s mineral resource upgrade as the Westgold board hold its collective breath, hoping to have snagged a good deal with Ora. It says the deal is likely to settle by next Tuesday and the ore purchase agreement will be executed in the three-to-six months to follow.
Westgold’s ability to secure another quarter of a million ounces of gold in its deal with Ora comes with perfect timing as the price of the precious yellow metal continues to hold its ground above the $3500 per ounce mark.
So, it is not a bad time to be adding more gold ounces to the books, especially in an area with exploration upside – right next to an existing processing plant.
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