Westgold and Karora to merge and form +400kozpa gold mining company

Westgold Resources (ASX: WGX) and Karora Resources have agreed to combine and create a +400kozpa gold mining company.

Under the agreement, Westgold will acquire all Karora shares with Karora shareholders to receive 2.52 Westgold fully paid ordinary shares, 68¢ in cash and 0.30 of a share in a new company to be de-merged from Karora for every Karora share held.

Upon completion of the transaction, Westgold will have a portfolio of assets capable of producing more than 400kozpa exclusively from a WA asset base, high quality exploration targets and a clear pipeline of growth projects. Additionally, the company will become a top five Australian gold producer with a market cap of around $2.2b.

Westgold managing director and chief executive Wayne Bramwell commented on the merger.

“The expanded business will have several large mines, be well funded, fully leveraged to the gold price and have optionality over an enviable selection of growth opportunities,” he said.

“Importantly, the business will have expanded human and physical resources to extend mine lives and production scale rapidly.”

Karora chairman and chief executive Paul Huet says the merger provides significant exposure to one of Australia’s largest gold producers.

“With the combination of Westgold and Karora, we are taking the next step by combining two highly complementary, free cash flow generating asset bases in one of the world’s finest mining jurisdictions to create a premier Western Australian mid-tier gold producer,” he said.

“The prospects for the combined company are tremendous, with over 13moz in gold resources fuelling production of around 400kozpa and 3200km² of combined exploration tenements in Australia’s most prospective gold mining regions.”

The new Westgold board will comprise of the current Westgold director and two directors from Karora. Upon completion of the transaction, Westgold and Karora shareholders will own 50.1% and 49.9% of the new company, respectively.