Westgold’s Shares Uplifted On ASX After Accepting The Superior Offer From Cobalt 27 For Lithium Royalty Sale

  • Dec 31, 2018 AEDT
  • Team Kalkine
Westgold’s Shares Uplifted On ASX After Accepting The Superior Offer From Cobalt 27 For Lithium Royalty Sale

Australian Gold Producer, Westgold Resources Ltd (ASX: WGX) made an announcement on 31 December 2018 stating that it is accepting a superior offer from Cobalt 27 Capital Corp for Mt Marion Lithium Royalty Sale. Following this news, the share price of WGX increased by 2.312 percent as on 31 December 2018.

Earlier on 7 December 2018, the company had announced regarding entering into a conditional letter of intent to divest its non-core lithium royalties at Mt Marion and Buldania to SilverStream SEZC for a total consideration of AUD$15 million. However, after this announcement, Westgold received an offer from Cobalt 27 Capital Corp to acquire the Mt Marion lithium royalty, for a total consideration of AUD$250,000 and 200 metric tonnes of physical cobalt metal in a warranted LME warehouse.

Westgold has decided to accept the Cobalt 27’s offer as it believes that it is a superior offer with current cobalt metal prices at USD$54,500 per tonne. The company has also agreed to pay the minor termination costs associated with the conditional SilverStream SEZC agreement.  As per the announcement, the agreement with Cobalt 27 remains subject to Cobalt 27 completing due diligence and final approval of their board.

Recently, Westgold Resources also announced that it is going to buy Andy Well and Gnaweeda Gold Projects to further expand its Murchison footprint. The company has already signed a binding term sheet with Doray Minerals Ltd to purchase the projects for $15 million in cash and shares which includes $9 million on completion.

At the Annual General Meeting (AGM) of the company which was held on 28 November 2018, the company informed the shareholders that FY 2018 was a busy year for the company. During the financial year 2018, the company Refurbished and commissioned 2 Process Plants – Fortnum & Tuckabianna. In FY 2018, the company was having six underground mines which were in an operating state. During FY 2018, the Company also acquired Australian Contract Mining (ACM) in an unplanned and reactive move to protect Westgold from the adverse reaction to ACM’s fiscal failure. The company invested $51 million in acquiring ACM, and the company re-invested a further $25.5 million in necessary capital to re-invigorate the business and pushed through ACM’s $21 million loss through its operating accounts during the year.

In the September quarter, the company reported gold output of 64,037 ounces. Further, the Company’s gold operations generated EBITDA (unaudited) of $11.9 million and reported cash costs (C1) of AUD$1,406/oz. As at 30 September 2018, the company was having cash and bullion of A$45.2 million.

In the last six months, the share price of the company decreased by $52.86 percent as on 28 December 2018. WGX’s shares traded at $0.885 with a market capitalization of circa $336.58 million as on 31 December 2018 (AEST 2:22 PM).


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