WGR’s Deferred Payment Deal and Tight Cash Highlight Execution Risks Ahead
Western Gold Resources has made significant strides in advancing its Gold Duke Project, securing a preferred mining contractor with a deferred payment facility and raising over $1.7 million in capital to support development towards production.
- Preferred mining contractor SSH Group selected with deferred payment facility
- Raised $720,000 in January and $1,052,991 post-quarter from strategic investors
- Multiple high-potential mining opportunities identified to extend life of mine
- Ongoing negotiations for gold processing solutions within haulage distance
- Appointment of Ryan Mount as additional Non-Executive Director
Strategic Contractor Selection and Capital Raises
Western Gold Resources Limited (ASX: WGR) has reported a productive March 2025 quarter, marked by the selection of SSH Group Limited as the preferred mining contractor for its 100%-owned Gold Duke Project. Notably, SSH Group has proposed a deferred payment facility designed to ease WGR’s cash flow pressures as it transitions towards production. This arrangement, while non-binding pending a master services agreement, signals a pragmatic approach to managing early-stage operational costs.
Complementing this, WGR successfully raised $720,000 in January 2025 through a share placement priced at a 28% premium to the 30-day VWAP, followed by a further $1,052,991 capital raise post-quarter from strategic long-term gold investors, including the Investius Microcap Fund. These funds are earmarked to accelerate project development activities, including finalising processing options and updating the scoping study.
Expanding the Gold Duke Resource and Life of Mine
A detailed review of the Gold Duke historical database has uncovered multiple high-potential mining targets that could extend the project’s life of mine beyond the initial 34,000-ounce production stage. These brownfields targets, situated within approved disturbance areas, offer promising extensions particularly around the Emu/Eagle Saddle, Joyners Find, Bottom Camp, and Gold King–Golden Monarch Saddle zones. The proximity of these deposits to existing infrastructure is expected to enhance operational efficiencies and reduce capital expenditure.
The current Mineral Resource Estimate stands at 3.25 million tonnes at 2.1 g/t gold, equating to 214,000 ounces, with metallurgical test work confirming up to 95% recovery in oxide ore via conventional carbon-in-leach processing. This robust resource base underpins the company’s confidence in scaling production and improving project economics.
Processing Plant Negotiations and Project Advancement
WGR is actively negotiating with several operating gold processing plants within economically viable haulage distances, exploring both toll treatment and ore purchase agreements. The company aims to conclude these discussions in the current quarter, a critical step towards final investment decisions and moving the project to shovel-ready status.
Meanwhile, the company is updating its September 2024 scoping study, which previously highlighted an extraordinary internal rate of return of 617% based on a gold price of A$3,500 per ounce. With gold currently trading around A$5,200 per ounce, the updated study is expected to reflect even stronger project economics.
Corporate Developments and Financial Position
In addition to operational progress, WGR appointed Ryan Mount as a Non-Executive Director to bolster the board’s expertise as the company transitions towards production. Cash on hand at quarter-end was $312,715, with exploration expenditure of $209,214 during the quarter focused primarily on the Gold Duke Project.
While no mining development or production occurred during the quarter, the company’s strategic capital raises and contractor arrangements position it well to advance development milestones. The deferred payment facility with SSH Group is particularly noteworthy as it reduces immediate capital requirements and mitigates dilution risk for shareholders.
Bottom Line?
WGR’s strategic partnerships and capital injections set the stage for critical project milestones, but final processing agreements and drilling results will be key to unlocking value.
Questions in the middle?
- When will WGR finalize the master services agreement with SSH Group and commence mining operations?
- Which processing plant option will WGR select, and how will it impact project economics and timelines?
- How will the updated scoping study reflect current gold prices and expanded resource potential?
