Westgold Resources to list two idle gold mines and exploration ground on ASX via $75m IPO early next year

Westgold Resources has announced plans to package two idle underground gold mines, plus adjacent exploration ground, into a new corporate vehicle. The initial public offering for an entity called Valiant Gold is scheduled next quarter and set to raise between $65 million and $75 million, with Westgold shareholders able to participate in a $20m “priority offer”. Westgold wants to retain a stake in Valiant post-listing of between 44 per cent and 48 per cent. Valiant’s key assets will be the South Emu-Triton and Comet underground mines, which were placed on care and maintenance in mid-2022 when gold was about $2,400 per ounce — nearly two-thirds less than its current value. The two mines combined produced more than 1 million ounces of the precious metal and are near Westgold’s Meekatharra and Cue processing hubs in the Mid West. “By establishing Valiant, we create an independent, well-funded gold company that can bring forward value from smaller assets,” Westgold managing director Wayne Bramwell said. “Valiant will have a fast-track to cash flow with an ore purchase agreement to be entered into with Westgold. “This collaborative, capital efficient model is proven, as demonstrated by Westgold’s investment and OPA with New Murchison Gold.” Oxide ore from NMG’s Crown Prince mine is currently being fed through Westgold’s Meekatharra processing hub. “Valiant can replicate this success,” Mr Bramwell said. “With several small underground mines in care and maintenance, a range of open pit opportunities, and exploration upside, the Valiant team has multiple near-term restart and growth options to deliver near-term cashflow.” Westgold’s planned demerger is the latest iteration of local gold producers flush with cash launching schemes to boost shareholder returns without acquiring assets in an overheated market. Last week, Westgold’s main rival Ramelius Resources pulled the trigger on a share buyback program and doubled its minimum dividend. Ramelius’ board approved spending up to $250m to purchase its stock from shareholders over the next 18 months and upped its base dividend from 1¢ a share to 2¢. Westgold in August announced it would also increase its minimum dividend from 1¢ a share to 2¢ and undertake a share buyback in the current financial year for up to 5 per cent of its stock. Shares in Westgold, which currently has a market capitalisation of about $5.8 billion, were down 0.3 per cent in early trade on Monday. Valiant is set to have market capitalisation of between $125m and $135m when it lists on the ASX. Mining technology consultant Brendan Tritton has been tapped to lead Valiant and Chalice Mining chairman Derek La Ferla will be the spin-out’s chair.