Western Gold Resources (ASX: WGR) has taken a significant step toward bringing its gold project into production by securing a toll milling agreement with Wiluna Mining Corporation (WMC). The agreement, which spans 24 months, provides access to WMC’s fully operational processing plant, located just 46 kilometers from the project. This agreement is expected to help the company move forward with Stage 1 production while it continues developing Stage 2 for potential expansion.
The project hosts shallow, free-milling ore, allowing for efficient and cost-effective open-pit extraction. The first stage of development involves the extraction of 447,000 tonnes of ore at a grade of 2.55 grams per tonne (g/t) gold, which is expected to yield approximately 34,000 ounces of gold. This production will come from the Eagle, Emu, Gold King, and Golden Monarch deposits.
According to Western Gold Resources’ Managing Director Cullum Winn, the agreement is a critical milestone for the company, particularly as gold prices continue to surge. “This marks a monumental leap forward for Western Gold Resources. With all mining approvals in place, a preferred contractor selected, and gold prices at strong levels, we are well-positioned to accelerate our transition to a gold producer,” he said.
Scoping Study Under Higher Gold Prices
A scoping study released earlier this year projected a cash surplus of $38.1 million from Stage 1 production, based on a gold price of $3,500 per ounce. However, with the current Australian gold price exceeding $5,100 per ounce, Western Gold Resources is set to release an updated scoping study next month that will reflect these higher prices. The revised study will also factor in potential Stage 2 expansion opportunities, which could extend the project’s Life of Mine (LOM), enhancing cash flow, scalability, and operational flexibility.
In addition to this, the updated study will incorporate new grade control designs, which will be developed alongside infill drilling. The results from this drilling will contribute to the final mine design and scheduling.
Strategic Exploration and Development
All four open-pit areas slated for Stage 1 production — Eagle, Emu, Gold King, and Golden Monarch — have received full approval for mining. The company has also selected SSH Group (ASX: SSH) as its mining contractor. SSH Group has structured a deferred payment facility to assist with the project’s early-stage cash flow, reducing the need for upfront capital expenditure as Western Gold Resources works toward commencing production.
Looking ahead, the company is also exploring brownfields opportunities, including potential resources at deposits such as Joyners Find and Bottom Camp, which could offer future expansion opportunities.
As Western Gold Resources moves closer to its goal of becoming a gold producer, the company’s strategic agreements and exploration plans set the stage for continued growth and success in the industry.
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