Westgold sells Chalice project to Corazon for $18M

Westgold Resources (ASX, TSX: WGX) will sell its Chalice gold project to Corazon Mining (ASX: CZN) for A$25.7 million (approximately $18 million), a move that allows it to divest from a non-core asset in exchange for a major share ownership in another Australian miner.

In a statement on Tuesday, the companies announced they have signed a binding agreement on the transaction, comprising an upfront cash payment of A$8 million, about A$6.7 million in fully paid ordinary shares in Corazon, plus A$11 million in deferred cash payments tied to certain milestones.

Upon completion, Westgold would emerge as a 19.9% shareholder of Corazon, holding 47.6 million shares that it acquired from the project sale.

“Chalice is a non-core asset for Westgold, and this transaction reflects a disciplined approach to portfolio management and our willingness to cooperate with junior companies,” Westgold Resources’ managing director Wayne Bramwell said in a press release.

The Perth-based miner represents one of the largest gold producers in Australia, with six underground mine operations and four processing plants across the Murchison and Southern Goldfields regions of Western Australia. The Chalice project located in the Eastern Goldfields region within the Higginsville district, where it operates a carbon-in-leach plant and several operating processing facilities.

“The retained ~19.9% equity interest provides continued exposure to potential future outcomes while allowing Corazon to progress the Chalice gold project under its own focused exploration strategy in close proximity to our Higginsville Hub,” Bramwell added.

Emerging gold developer

For Corazon, the deal marks the transition from a multi-commodity explorer to a fully funded, single-focus gold developer in Western Australia, it said.

The Chalice project is a historical producer with two separate periods of operation: one between 1995-1999 (556,000 oz.) and another between 2011-2014 (89,000 oz.). The ore extracted had an average gold grade of 5.4 grams per tonne, which Westgold said “substantially exceeds” the current resource grade. According to company estimates, the deposit hosts a JORC-compliant resource of 191,000 oz. at 2.7 g/t gold.

“The acquisition of the Chalice gold project is a genuinely transformational step for Corazon. 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,” said Corazon managing director Simon Coyle.

To fund the transaction, Corazon plans to raise A$16.5 million (before costs) from a single-tranche private placement, offering 117.9 million shares at A$0.14 apiece. The stock closed at A$0.16 on Tuesday, down 20%, giving the junior explorer a market capitalization of A$11.8 million ($8.4 million). Westgold also declined 2%, for a market capitalization of A$4.9 billion ($3.5 billion).