ASX-listed Pacgold has entered into a binding agreement to acquire 100% of the White Dam gold operation, in South Australia, from ASX-listed GBM Resources, in a transaction that will see the company transition from explorer to producer.

The acquisition will give Pacgold full ownership of an established operation with existing infrastructure and a defined resource, providing a pathway to near-term gold production and cash flow, the company said on October 6.

The White Dam project, located about 80 km southwest of Broken Hill, was operational from 2010 to 2018 and produced about 180 000 oz of gold through heap leaching of 7.5-million tonnes of ore at an average grade of 0.94 g/t.

Mining took place from two openpits, Hannaford and Vertigo, while the White Dam North resource remains unmined. The operation still contains a Joint Ore Reserves Committee- (Jorc-) compliant resource of 4.6-million tonnes at 0.7 g/t for 102 000 oz of gold, about 29% of which is in the indicated category.

The site includes a full suite of infrastructure, such as a processing plant, heap leach pad, power systems, openpits and a fully equipped camp. The plant remains in working order and Pacgold has estimated about A$800 000 in capital expenditure will be required for maintenance and upgrades to the power generation system as part of its staged restart programme.

The total consideration for the acquisition includes an upfront payment of A$1.2-million in cash, inclusive of a A$75 000 exclusivity fee, funded from existing cash reserves.

In addition, Pacgold will issue 15-million fully paid ordinary shares subject to a 12-month voluntary escrow period and a contingent payment of A$2.2-million, payable in cash or shares at Pacgold’s discretion, upon achieving commercial production of at least 5 000 oz of gold from the project.

Completion of the acquisition is expected by December and remains subject to several conditions, including shareholder approval for the issue of consideration shares, necessary third-party approvals and confirmation that any intercompany debts owed to GBM or its affiliates have been settled.

The agreement also provides for Pacgold to assume existing royalties and retain the benefit of an environmental bond valued at around A$2-million.

In conjunction with the acquisition, Pacgold has engaged Bell Potter and Taylor Collison as joint lead managers to undertake a capital raise to fund the purchase and advance the restart of operations.

The placement will target professional and sophisticated investors and will also support exploration, resource development, and general working capital requirements. Pacgold has requested a voluntary suspension of trading while the placement is finalised and expects to resume trading around October 8.

 “We are delighted to have secured this transformational acquisition for Pacgold, providing a clear pathway to near-term gold production and cash flow from the White Dam Gold Operation in South Australia, only 80 km from the well-established mining hub of Broken Hill and with a fully operational plant with significant production history, and minimal up front capital required to recommence gold production.”

“With gold remaining in the heap leach and a solid Jorc resource base, White Dam offers both immediate production opportunity and significant growth potential through future resource development and exploration over a large tenement package with multiple drill ready targets,” Pacgold MD Matthew Boyes said.

He added that the acquisition would strengthen Pacgold’s broader portfolio by generating short-term revenue while supporting its flagship exploration assets in Queensland.

“Importantly, this acquisition complements our existing portfolio, enabling us to generate short term cash flow while continuing to advance our flagship Alice River gold project and the St George gold/antimony project, in northeast Queensland.

“Together, these assets position Pacgold with a unique project portfolio of near-term production, resource growth, exploration upside and consistent year-round news flow,” he said.

Following completion, Pacgold plans to implement a three-phase approach to recommence operations at White Dam. The initial phase, expected to begin within two months of completion, will focus on recrushing and retreating material from the existing heap leach pad to extract remaining gold, alongside infill drilling and updated mine planning.

Medium-term plans include near-mine exploration and potential resource expansion, with longer-term work targeting regional exploration and potential acquisitions to extend mine life and resources.