ASX- and TSX-listed Westgold Resources has agreed to divest its noncore Lakewood mill in Western Australia to fellow ASX-listed Black Cat Syndicate for a total consideration of $85-million.
The deal includes $70-million in staged cash payments and $15-million in Black Cat shares, escrowed for 12 months. Black Cat will also assume $8-million in rehabilitation liabilities.
For Westgold, the divestment aligns with its strategy of consolidating operations and focusing on larger-scale processing to improve efficiency and margins. MD and CEO Wayne Bramwell said in a statement that the company is directing its resources toward expanding its Beta Hunt mine and increasing the capacity of the Higginsville mill, with an expansion study nearing completion.
"Larger mines feeding larger processing plants is Westgold's strategy to deliver higher operational outputs and operating margins at lower cost. The divestment of noncore assets such as Lakewood realises value from second-tier assets and consolidates our processing capacity in a single location," Bramwell stated.
As part of the agreement, Westgold retains optionality and priority access to up to 200 000 t/y of processing capacity at Lakewood through a toll-treating arrangement for two years. This ensures Westgold maintains flexibility while executing its expansion plans at Higginsville.
For Black Cat, the acquisition is a transformational step in accelerating its gold production plans. The fully operational 1.2-million-tonne-a-year Lakewood mill allows the company to increase throughput capacity by over 50%, fast-tracking its Kal East Gold Operation by about 15 months.
Black Cat MD Gareth Solly highlighted the strategic advantages of acquiring an established facility rather than constructing a new one. "This acquisition accelerates Kal East by eliminating the risks associated with construction. It provides a clear pathway to cash generation while leveraging our existing 1.3-million-ounce resource base near Lakewood," he said.
The acquisition also enhances Black Cat’s flexibility in processing ore, with plans to process its own ore and potentially toll treat third-party ore, including from Westgold. Additionally, existing infrastructure such as grid power, sealed roads, and a newly commissioned tailings storage facility further strengthen the mill’s appeal.
The transaction is expected to close on or before March 31, 2025.
Karora, which Westgold bought last year, acquired the Lakewood mill for A$80-million in 2022 as a way of derisking its Beta Hunt asset. 