Westgold Resources Ltd. and Karora Resources Inc. have agreed to combine in a merger where Westgold will acquire all shares of Karora. Both companies are Western Australian gold miners. Westgold produces 220,000 to 230,000 ounces per year (oz/y) and Karora’s 2024 guidance is 170,000 to 185,000 oz/y.
Karora shareholders will receive 2.524 Westgold shares, A$0.68 in cash and 0.30 of a share in a new company to be de-merged from Karora (SpinCo) for each Karora share held at the closing of the transaction. SpinCo’s assets will comprise Karora’s existing 22.1% interest in Kali Metals Ltd.
Upon completion of the transaction, which is expected in July 2024, Westgold shareholders will own 50.1% of the combined company and former Karora shareholders will hold the remainder. The enlarged Westgold will have a market capitalization of approximately A$2.2 billion ($1.4 billion).
The combined portfolio of assets can produce more than 400,000 oz/y. The merger will create one of the largest unhedged Australian gold producers. The combined pipeline will include advanced organic growth options and exploration targets across Karora’s Beta Hunt and Higginsville properties and Westgold’s Murchison and Bryah properties.
“The prize here is Beta Hunt’s gold potential,” Westgold Managing Director and CEO Wayne Bramwell said. “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.”
Westgold operates five mines in the Murchison and Bryah regions. The Murchison operations include two mills, which are fed by three underground mines (Big Bell, Bluebird and Fender). The next stage of growth is underpinned by an expansion project at Big Bell, the development of a new decline at the Bluebird, ramp-up of Fender and development of the new Great Fingall mine.
The Byrah operations consist of a mill and the Starlight open-pit mine. Westgold recently established new 3- to 4-year mine plans for the Starlight operations following a design optimization that has started to deliver significant improvements.
In addition to the Beta Hunt gold mine and its nickel by-product, Karora also owns the Higginsville gold operations. Ore is processed at two centralized plants, the 1.6-million-metric-ton-per-year (mt/y) Higginsville mill and the 1.2-million-mt/y Lakewood mill, both located near its mining operations.
