Saracen Mineral Holdings will offload the Red October gold mine in Western Australia to Matsa Resources for $2 million in cash and shares.
The deal will see Saracen receive $1 million in cash and 4.545 million Matsa shares. The new owner will also assume all environmental liabilities at the Goldfields site.
Once the transaction has been completed – expected late next month – Saracen will hold a 3.04 per cent stake in Matsa.
Saracen managing director Raleigh Finlayson said the sale of Red October was an opportunity to crystallise value from an asset, which had become non-core for the company, at a time when it had recorded substantial production and reserve growth.
“We are experiencing outstanding growth at the Karari and Thunderbox mines, located immediately adjacent to the Carosue Dam and Thunderbox mills respectively,” Finlayson said.
“While Red October is a high-quality asset, its potential as a source of ore is being displaced by the abundance of higher margin ore closer to milling infrastructure.
“Saracen will retain ongoing exposure to the asset through its shareholding in Matsa, making this an excellent outcome for both parties.”
Red October is 12km from Matsa’s Fortitude gold project. Matsa launched trial mining at Fortitude in July.