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Higlights
- Westgold executes a gold ore purchase agreement (OPA) for Crown Prince ore from Zeus Mining, a subsidiary of New Murchison Gold Limited (ASX:NMG).
- Agreement subject to shareholder approval from NMG, expected at a general meeting in January/February 2025.
- OPA to purchase between 30,000 to 50,000 tonnes of gold ore per month, with processing at Westgold’s Bluebird plant.
Westgold Resources Limited (ASX:WGX) (TSX:WGX) (OTCQX:WGXRF) is pleased to announce that it has entered into a gold ore purchase agreement (OPA) with Zeus Mining Pty Ltd, a subsidiary of New Murchison Gold Limited (ASX:NMG). The agreement, which is set to significantly enhance Westgold’s production capabilities, remains subject to approval from NMG’s shareholders, as Westgold holds an 18.7% stake in NMG and is thus considered a related party under the ASX Listing Rules. NMG will seek shareholder approval at a general meeting to be held in January or February 2025.
The Crown Prince project, located approximately 33 kilometers from Westgold's 1.6-1.8Mtpa Bluebird processing plant, holds a current JORC (2012) Indicated and Inferred Mineral Resource of 2.21 million tonnes at 3.9g/t Au, equating to 279,000 ounces of gold. Under the terms of the OPA, Westgold will purchase between 30,000 and 50,000 tonnes of gold ore per month from NMG’s planned open pit operation at Crown Prince.
Timelines and Expected Impact
Pending final regulatory approvals, NMG plans to commence open-pit mining at Crown Prince in mid-2025. The first two years of the agreement, covering FY26 and FY27, will focus on processing the softer oxide ore from Crown Prince, which is expected to increase throughput at Westgold's Bluebird plant. This addition is anticipated to boost Westgold's production and reduce its cost per ounce, benefitting both Westgold and NMG shareholders.
Following the initial two-year term, the agreement allows for the possibility of ongoing terms on a rolling, quarter-by-quarter basis. This provides flexibility for both companies as they work together to maximize the potential of the Crown Prince deposit.
Strategic Benefits and CEO Commentary
Westgold's Managing Director and CEO, Wayne Bramwell, commented:
"Westgold is delighted to have achieved a mutually beneficial outcome for both New Murchison Gold and Westgold shareholders. This commercial arrangement is capital efficient for both companies as it leverages the existing processing infrastructure that Westgold has at Meekatharra.
The introduction of softer oxide ore from Crown Prince in FY26 effectively increases throughput at the Bluebird plant, growing production and reducing our cost per ounce. At the same time, NMG is able to unlock a pathway to production for its Crown Prince deposit without the capital expenditure and execution risks associated with building a processing plant.
This is a win-win for all shareholders, and we look forward to working closely with New Murchison Gold in the development of the Crown Prince deposit."
Outlook
The agreement is a significant step forward for both Westgold and NMG, providing a clear path to increased gold production and improved operational efficiency. Westgold's strategy of leveraging its existing infrastructure, coupled with the addition of Crown Prince ore, will strengthen its position in the market while providing NMG a capital-efficient way to unlock the value of its Crown Prince deposit. The companies are optimistic about the successful implementation of this partnership and the long-term value it will bring to shareholders.
