Western Gold Resources closes in on production with milling agreement

• WGR secures toll milling agreement for Gold Duke ore
• Updated scoping study expected next month 
• Current scoping study reported an undiscounted cash surplus of $38.1 million using A$3,500/oz gold price, with gold prices now exceeding ~A$5,100/oz
• Brownfields exploration is continuing at the project

Special Report: Western Gold Resources is transitioning from explorer to producer after inking a binding milling agreement to fast track the Gold Duke mine.

The project hosts shallow, free-milling ore, enabling rapid, low-cost open-pit extraction and early access to production.

The planned stage 1 development involves the production of 447,000t at 2.55g/t gold for 34,000oz of gold from the Eagle, Emu, Gold King and Golden Monarch deposits.

Bringing the project closer to production, Western Gold Resources (ASX:WGR) has signed a toll milling agreement with Wiluna Mining Corporation (WMC) whose Wiluna processing plant is only 46km from the project with a haulage route in place.

WMC’s processing plant is fully operational

The agreement is for 24 months allowing the company to lock in stage 1 production while developing stage 2 for potential extensions to the Life of Mine (LOM) from deposits such as Joyners Find and Bottom Camp. 

“This marks a monumental leap forward for Western Gold Resources and with gold prices surging, all mining approvals in place and a preferred contractor selected, we are well positioned to accelerate our transition to a gold producer,” Managing Director Cullum Winn said.

Scoping study at higher gold prices

Under the 2024 scoping study, the company forecast an undiscounted cash surplus of $38.1 million from stage 1 production.

However, this was based on an assumed gold price of $3500/oz, well below the current Australian gold price above the $5100/oz mark.

The company expects to release an updated scoping study next month taking into account the higher prices and considering stage 2 expansion opportunities which could extend the LOM and enhance cash flow, scalability and operational flexibility.

This update will also include grade control design, which will be undertaken in parallel with infill drilling, with results feeding into the final mine design and scheduling process. 

Brownfields exploration in the works

All four stage 1 open pits — Eagle, Emu, Gold King and Golden Monarch — are fully approved for mining and chosen mining contractor SSH Group (ASX:SSH) brings a deferred payment facility.

Deferred payments are structured to support WGR’s cash flow during the early stages of mining and are expected to reduce the level of upfront funding required to bring the project into production. 

Plus, the company isn’t resting on its laurels, with exploration planned at several brownfields targets including:

• Joyners Find – inferred resource 90,000 tonnes at 2.6g/t gold for 7,000 ounces
• Bottom Camp: inferred resource of 640,000 tonnes at 1.6g/t gold for 33,000 ounces
• Emu/Eagle Saddle: 900-metre mineralised strike zone indicating strong potential for resource expansion
• Gold King/Golden Monarch Saddle: 800-metre target zone with encouraging nearsurface intercepts 

This article was developed in collaboration with Western Gold Resources, a Stockhead advertiser at the time of publishing. 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.