Trading halt today for a capital raise, reported in the AFR as seeking $100 million. Placement priced at $2.10 a share - nearly 14% discount on yesterday's close. Funds to go to expansion projects to lift production from approx 270000 ounces to over 400000 ounces of gold in FY2024.

"A presentation sent to potential investors said Murchison’s Bluebird underground expansion would add 50,000 ounces per year, while accelerating new production from Murchsion’s Fender underground development would add 30,000 ounces of gold a year."

Disc: held

M& A action at Westgold; Gascoyne Board says do nothing yet.   Disc:  held

WESTGOLD ANNOUNCES INTENTION TO MAKE TAKEOVER BID FOR GASCOYNE RESOURCES LIMITED

Westgold Resources Limited [ASX: WGX - Westgold or the Company] announces its intention to make an off- market takeover offer [Offer] for all the issued shares in Gascoyne Resources Limited [ASX: GCY - Gascoyne].

Westgold’s Offer is one [1] Westgold Share for every four [4] Gascoyne Shares.

This Offer provides Gascoyne shareholders with an opportunity to achieve a significant market premium for their shares by Gascoyne walking away from the proposed highly dilutive merger by scheme with Firefly Resources Limited [Firefly]. The Offer also enables Gascoyne shareholders to maintain their exposure to the Gascoyne assets and their growth by becoming part of a much larger, well-funded and established group which is already the dominant gold producer in the region [Figure 1].

Specifically, the Westgold Offer price represents premiums of:
34.7% to the closing price of Gascoyne Shares on the ASX on 29 September 20211;
33.1% to the one-month VWAP of Gascoyne Shares on the ASX to 29 September 20212; and  

30.2% to the three-month VWAP of Gascoyne Shares on the ASX to 29 September 20213.

The Offer will be made by Westgold, either directly or via one of its subsidiaries as the bid vehicle.

The Offer will be subject to the merger between Firefly and Gascoyne [Firefly Scheme] announced by Gascoyne on 16 June 2021, not proceeding, including as a result of the valid termination of the Scheme Implementation Deed for the Firefly Scheme.

Westgold Offer Highlights

• Provides a substantially superior financial alternative to Gascoyne shareholders compared with the proposed merger with Firefly given Westgold is bidding a compelling and attractive premium for Gascoyne.

• Removes ongoing funding risk to Gascoyne shareholders as Westgold is debt free and well-funded.

• Consolidates a combined exploration portfolio of ?3900km2 across the Murchison and significantly

  increases the combined company’s Mineral Resource base to ?9.1 Moz.

• Provides a tangible pathway to commercialise Gascoyne’s stranded Mt Egerton and Glenburgh Projects by utilising Westgold’s existing milling infrastructure at the Meekatharra and/or Fortnum processing hubs.

• Removes concerns of longevity of the Dalgaranga operations where mining is currently forecast to end in early 2025 by integrating excess mining tonnage available from Westgold’s Cue operations.

• Provides Gascoyne the opportunity to join with a larger, financially stronger regional producer and become Australia’s 5th largest Australian domestic gold producer [with expected proforma FY22 production of ?350,000 oz of gold] and a growing pipeline of near-term development projects.

  1 Westgold closing price of $1.67 and Gascoyne closing price of $0.31 on 29 September 2021
  2 Volume weighted average price [VWAP] from 30 August 2021 to 29 September 2021 sourced from Bloomberg 3 VWAP from 29 June 2021 to 29 September 2021 sourced from Bloomberg

• Builds a larger, regionally dominant producer that can leverage its combined mining infrastructure and >6.5Mtpa total milling capacity across four [4] regional processing hubs with the aim to expand the combined production profile towards +500,000 oz Au per annum.

• Elevates the market presence of the combined entity and may result in improved liquidity.

• Commenting on the Offer, Westgold’s Executive Director, Wayne Bramwell said:

  “After several tumultuous years the Gascoyne shareholders now see their company at the crossroads yet again.

  The Independent Technical Assessment and Valuation Report in the proposed Firefly Scheme sees Gascoyne merge with a junior explorer offering all the risks associated with early-stage exploration assets. The Firefly Scheme evidences the cost of the transaction is large to Gascoyne shareholders and the independent valuations of the Firefly mineral assets are significantly lower than the price the Gascoyne Board has agreed to pay.

  Gascoyne’s recently announced financial statements shows that in the last 12 months Gascoyne raised a net $85.2 million in new share issues, then forced to impair its assets by $80.2 million4, again in Westgold’s view, destroying value for its shareholders. The financial statements also detail the Gascoyne’s debt burden to its secured and unsecured lenders and their rights to sweep most of Gascoyne’s free cash.

  It is unclear how the Firefly Scheme will remove these burdens.

Westgold Resources Limited [ASX: WGX - “Westgold” or “the Company”] is pleased to provide gold production guidance for financial year 2021-22 [FY22].

• Group gold production  + 270,000 oz

• Cash cost of sales [C1]  A$1,250 - 1,400 / oz

• All-in sustaining Cost [AISC]  A$1,500 – 1,700 / oz

Output is expected to ramp over each quarter of the full year. Westgold CEO Debbie Fullarton commented:

“Westgold Group gold production has increased annually since 2019 [Figure 1] with the benefits of heavy investment starting to flow through into the Group’s 2020-21 [FY21] financial results.

On a cost guidance basis Westgold has managed costs extremely well in FY21 despite rising cost pressures. In FY22, Westgold’s gold production is expected to grow again to more than 270,000 oz as Big Bell, Bluebird and the South Emu-Triton mines achieve higher levels of output. Provided production inputs like labour, mining equipment and consumables don’t continue to rise excessively, we are poised to deliver another solid performance in FY22.

With this backdrop and continuing proactive cost management, the strategy for FY22 is focussed on lifting grade and cost optimisation within our mines so as to continue building financial strength to fund Westgold’s organic and regional growth aspirations.”