CORRECTION: it was Diversified Mineraks they bought it all off .
From the Adelaide Advertiser last year ... http://www.adelaidenow.com.au/busin...e/news-story/6e2dd940703eb3c5dc8ac59aea2026c1
As you can see from the story pretty much nothing has worked out as anticipated including the gold price but the Chairman Bob Duffin is an enormous major shareholder and has a long (and honest?) career in the industry and my impression is the co still believes in its story.
WPG Resources is buying the remaining 50 per cent stake in the Challenger gold mine in the state’s Far North from its joint venture partner.
The company will acquire the stake from Diversified Minerals for $9 million and will also issue 25 million options in WPG at 11c each, subject to shareholder approval.
Diversified Minerals, which has also opted out of a regional exploration joint venture, is a subsidiary of the mine’s operator Pybar.
To fund the deal and also fast-track development of its proposed Tarcoola mine project, WPG is raising $13.5 million, through a finalised placement offer of $7.35 million and an $6.12 million 1-for-6 non-renounceable offer to eligible shareholders.
The placement and offer are priced at 6.5c per share.
“The acquisition will double WPG’s share of the production,” chairman Bob Duffin said. “The investment metrics are attractive.”
Ore from WPG’s project Tarcoola, which is still in the environmental permitting stages, will be processed at Challenger.
Mr Duffin explained that full ownership of both projects would avoid the need to process Tarcoola ore at Challenger under a costly toll treating arrangement and would double its exposure to the exploration in the region.
WPG is expected to start production at Tarcoola by September, which will lift its aspirational production target to 70,000 ounces of gold per annum.
It is understood Diversified Minerals opted out of the venture to raise cash for Pybar to start early works on another major proposed copper-gold mine project in South Australia, OZ Minerals’ Carrapateena.
Pybar was awarded a $65 million contract this month to start construction on the Carrapateena decline by August.
Mr Duffin said the involvement with Diversified Minerals remains on foot with it being one of WPG’s larger shareholders and also through the relationship with mining contractor Pybar.
“We look forward to building on these strong relationships going forward,” he said.
WPG and Diversified Minerals bought the mothballed mine from Kingsgate Consolidated in March for about $1 million. The operation, which employs about 125 workers, was restarted in May at a cost of about $3.7 million to the end of June.
“Yes, we are paying (DMPL) more than what we paid for the asset, but the payback on it is less than one year,” Mr Duffin said.
Gold shipments to date totalled 4562 ounces with sales at 3794 ounces for gross revenue of $6.7 million at an average price of $1776 an ounce.
The company raised $2.65 million in April this year through a placement of 41.4 million shares to progress development of Tarcoola and restart Challenger.
At the end of the June, WPG had a cash balance of $4.6 million.
WPG Price at posting:
2.2¢ Sentiment: None Disclosure: Held
