Australian gold producer Westgold Resources (ASX, TSX: WGX) will sell the Chalice gold project in Western Australia to Corazon Mining (ASX: CZN) for A$25.7 million ($25.1 million), shedding a non-core asset while taking a near-20% stake in the junior explorer.
The binding deal, signed Tuesday, includes A$8 million in cash, A$6.7 million in Corazon shares and A$11 million in deferred cash tied to milestones. Westgold will hold 47.6 million Corazon shares, equal to 19.9% of the company, once the sale closes.
“The acquisition of the Chalice gold project is a genuinely transformational step for Corazon,” Managing Director Simon Coyle said in a press release. “Chalice is a proven, high-grade gold system that has produced nearly 650,000 oz., and with a resource that remains open in multiple directions, we believe the best discovery work is still ahead of us.”
The deal gives Westgold ongoing exposure to Chalice without funding the asset itself and gives Corazon a single gold focus in Western Australia.
Emerging developer
The past-producing mine sits in the Eastern Goldfields’ Higginsville district near Westgold’s Higginsville hub. It produced 556,000 oz. between 1995 and 1999 and another 89,000 oz. between 2011 and 2014. Westgold says the mine’s historical average grade of 5.4 grams gold per tonne was well above the current JORC-compliant resource of about 2.2 million tonnes grading 2.7 grams gold per tonne for 191,000 ounces.
Corazon plans to raise A$16.5 million before costs through a private placement of 117.9 million shares at A$14¢ each to fund the purchase. Its shares closed Tuesday at A16¢, down 20% and valuing the company at A$11.8 million. Westgold fell 2%, leaving it with a market capitalization of A$4.9 billion.
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