Westgold, Southern do Cannon deal

WESTGOLD Resources and Southern Gold have done a deal for the Cannon underground ore east of Kalgoorlie that both expect will push their cash positions north.

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Miner and processor Westgold will pay Southern Gold A$1.5 million upfront and $160 per ounce for gold produced from the junior’s 23,580 ounce deposit, with $180/oz to be paid for all production in-excess of 15,000oz.

An additional $30 per ounce will be paid if the gold price averages above $1800/oz for a quarter.

Southern looked at the economics of developing the Cannon underground deposit in its own right, before concluding that utilising its partner in the previous open cut venture was the best way to go.

Westgold described the “tribute mining agreement” for Cannon as a win for both companies.

“This new agreement is essentially an extension to (the earlier open cut deal...