Westgold Resources has signed an agreement to acquire Australian Contract Mining (ACM), one of the largest privately-owned specialist underground mining contractors in Australia.
The deal will set Westgold back $2.5 million in cash plus 14 million fully-paid ordinary Westgold shares – and is also subject to a due diligence investigation into ACM.
Following the successful commissioning of its fourth gold operation at Fortnum, Westgold is turning its focus onto lowering its cost of mining by making its gold projects “more flexible and efficient”.
By becoming owner operator, the company insists the move with act as a “key driver” in the reduction of contractor margin and will increase flexibility in its mining plans.
“This is a fantastic move and opportunity by the company to consolidate and focus the outputs from our operations to the common goal of increased gold production at lower cost per ounce,” said Peter Cook, Westgold’s managing director.
“Westgold has an excellent growth trajectory from our gold projects [and] primarily involves the re-establishment of a number of larger underground mines.
“ACM is an excellent underground mining contractor with a highly skilled, motivated and productive team, and a pool of equipment and resources ideally matched to compliment our growth profile.”
Westgold intends to integrate ACM with its existing internal open-pit mining fleets and operate as an “internal diversified mining services division”.
ACM will service operations as part of a “larger and more resourced” group, and will take on third-party contracting if the opportunity arises.
Brian Rodan, ACM’s founder, will continue as CEO of the subsidiary and will join the executive management of Westgold.