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WPG Resources Ltd has completed the acquisition of its former partner’s 50% interest in the Challenger mining and exploration joint ventures in South Australia. This results in WPG owning 100% of the Challenger gold mine and 34% of the separate West Gawler Craton gold exploration joint venture. To fund the $9 million cash component of the purchase price, WPG recently completed a $13.7 million capital raising. Bob Duffin, chairman, commented: “The investment metrics for doubling our interest in Challenger alone are compelling. “But in addition, the transaction avoids the need to process Tarcoola ore at Challenger under a costly toll treating arrangement, and it has also doubled WPG’s exposure to the exploration upside potential of the Western Gawler Craton Joint Venture”. Acquisition details The purchase price was $9 million plus 25 million WPG options priced at $0.11 expiring 30 September, 2018 to Diversified Minerals Pty Ltd (DMPL). DMPL is one of WPG’s larger shareholders and partner in the two joint ventures that encompasses the Challenger mine and exploration ground. The second joint venture, the Western Gawler Craton Joint Venture is managed by a separate party, Tyranna Resources Ltd. The deal will add DMPL’s interest to WPG’s standing 19% interest. PYBAR Mining Services, a company related to DMPL, is the company’s current mining contractor at Challenger. Challenger gold mine The Challenger gold mine resumed production and site operations during May 2016. Recently, strong headway was made towards reaching the mine’s previously provided aspirational production target of 50,000 ounces of gold per annum. Over 1,000 ounces of gold was mined for each of the first three weeks of July. The acquisition has doubled WPG’s share of gold production at Challenger, effective from 1 August 2016. Previous to this transaction, the mine was run through a 50/50 joint venture known as the Challenger joint venture (CJV). Challenger has produced over one million ounces of gold since it opened in 2002 until being temporarily suspended by the mine’s former owner in March, 2016. Total underground and lower grade surface stockpiles ore reserves estimate at Challenger are 557,800 tonnes grading 4.65 g/t for 83,400 ounces of gold. Synergies with Tarcoola and Tunkillia projects Challenger is located close to WPG’s existing Tarcoola and Tunkillia projects in the Gawler Craton which will provide significant operating synergies for all of WPG’s assets. WPG is in the final stages of securing approval of its environmental permit for the development of its 100% owned Tarcoola gold project. The Tarcoola mining lease was granted in March 2016. Ore from Tarcoola will be trucked to Challenger for treatment at the mill. WPG has an aspirational production target for Tarcoola of 20,000 ounces of gold per annum when in full production which is expected to be later this calendar year. |
