Monsters of Rock: Westgold gains support in Gascoyne stoush and Whitehaven rejects coal criticism
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Westgold Resources (ASX:WGX) appears to have secured the support of Gascoyne Resources’ (ASX:GCY) biggest shareholder despite losing a last minute bid with the Takeovers Panel to delay a meeting key to its offer.
Gascoyne, which plans to merge with junior explorer Firefly Resources (ASX:FFR), has spent the past month batting off the advances of Peter Cook’s Westgold.
Westgold initially launched a 1 for 4 all scrip takeover bid of Gascoyne last month on the proviso that it receive the support of 50.1% of Gascoyne shareholders and Gascoyne cancel its scheme of arrangement with Firefly.
Initially Westgold only secured the support of one of Gascoyne’s big shareholders, First Sentier. But the dominoes began to fall after Westgold this week improved its offer to 3 for 11, the equivalent of 53c a share.
NRW Holdings (ASX:NWH) it was revealed last night, had given Westgold its blessing, giving Westgold the support of 25% of the voting shares in its target.
Then today the bombshell dropped that German investor Deutsche Balaton, initially supportive of Gascoyne’s no deal position and the major 22% owner of the Dalgaranga gold miner, had wavered, saying it does not want the Firefly deal to go ahead and considers the Westgold scheme the superior offer.
It puts Gascoyne in a tough position. Firefly shareholders are due to meet at 2pm WA time to vote on the initial merger deal, with a second court date on the scheme due on November 1.
Gascoyne’s board “continues to review the Westgold Offer and is taking advice from its legal and financial advisors,” and still recommends shareholders “take no action” on the Westgold offer.
Westgold’s plan is to hoover up Gascoyne’s Dalgaranga mine and 2.5Mtpa processing plant in a bid to increase its annual gold output, which is centred on a number of mines and mills around the Mid West to 350,000ozpa.
It sees the opportunity to leverage the strategic position and resource base to increase its production profile to 500,000ozpa over time.
The company, which paid a maiden dividend as a standalone gold miner this year, reported a record quarter in the three months to September 30 today.
Ounces produced rose 16% on the June Quarter to 66,173 oz at all in sustaining costs of $1,582/oz, with production records at Westgold’s Blue Bell, Bluebird and Comet mines.
Westgold ended the quarter with $139m in cash after selling its bounty at $2,322/oz for a notional revenue of $153m and mine operating cash flow of $5m.
The board of Whitehaven Coal (ASX:WHC) has copped a first strike on its executive remuneration at its AGM today.
It came despite rampaging coal prices driving a turnaround in the east coast miner’s fortunes.
A shareholder resolution proposed by activist group Market Forces for Whitehaven to propose a plan to manage down its coal mines over time was not officially voted on after a resolution to amend Whitehaven’s constitution failed, but received 9.43% support, more than double the number a similar resolution did last year.
Chairman Mark Vaile, a former Deputy Prime Minister and National Party leader during the reign of John Howard, said investment would be needed in coal mines due to rising energy needs at the same time as the energy transition progressed.
“In a more carbon-conscious world that will need more energy to support growth, we see a role for high-quality coal being used in tandem with advanced generation technology to deliver improved emissions outcomes,” he told shareholders in his address.
“The current global energy crunch, while reflecting a wide range of factors, also demonstrates the risks of underinvestment in sectors that will remain vital to economic growth and social development as the world undertakes the multi-decade energy transition.
“Our perspectives on the continuing demand for high-quality coal in the region underpin the investment thesis behind our growth projects.
“Vickery and Winchester South will see Whitehaven’s portfolio weighted more strongly to the demand for metallurgical coal in South and Southeast Asia.
“Over the past year, we received final approval for our Vickery Extension
Project, and both Vickery and Winchester South continue to progress in-line with the Board’s cautious approach to capital allocation.”
Vaile said Whitehaven’s board anticipates a return to dividend payments next financial year on the back of record coal prices.
Managing director Paul Flynn said under the voluntary framework recommended by the Financial Stability Board’s Task Force on Climate-Related Financial Disclosure, Whitehaven’s business remained robust under all carbon scenarios.
The owners of the Gruyere gold mine, South Africa’s Gold Fields and Australian mid-tier Gold Road Resources (ASX:GOR) have added more than 1 million ounces to their gold reserves.
The updated Gruyere open pit reserve of 103.3Mt at 1.28g/t for 4.24Moz will take the life of the remote WA gold mine out to 2032 at an expanded production rate of 350,000ozpa.
“This is a material increase in Ore Reserves that further establishes Gruyere as a Tier One Gold Mine,” Gold Road managing director Duncan Gibbs said.
“Very few gold producers can reliably claim such a long-life production outlook with confidence.
“The update is the culmination of multiple comprehensive high-quality studies undertaken by the Gruyere Joint Venture. Gruyere will be amongst the deepest Australian open cut gold mines achieving a final depth of approximately 500 metres.”
The mine suffered from mill issues in the September quarter, resulting in lower than expected production of 59,371oz at all in sustaining costs of $1697/oz. Mined grades are expected to increase in the December Quarter.
Gold Road has turned with the Gruyere mine from a junior explorer to a mid-tier hungry for growth, announcing a $166 million all-cash bid last week for Ramelius Resources takeover target Apollo Consolidated to snare its 1.1Moz Rebecca gold project.