Westgold’s Demerger Risks Diluting Focus Amid Core Asset Expansion
Westgold Resources is set to demerge its non-core Reedy and Comet gold projects into a new ASX-listed entity, Valiant Gold, aiming to unlock value and fast-track cash flow through a strategic ore purchase agreement.
- Demerger and IPO of Reedy and Comet assets to Valiant Gold in Q3 FY26
- Valiant to raise $65-$75 million with $20 million priority offer for Westgold shareholders
- Ore Purchase Agreement enables Valiant to access Westgold’s processing hubs for near-term production
- Westgold retains 44-48% equity stake in Valiant post-IPO
- Experienced Valiant board appointed to focus on exploration and development
Strategic Spin-Out of Non-Core Assets
Westgold Resources Limited (ASX – WGX) has announced a significant corporate restructuring plan to spin out its non-core gold assets into a newly formed company, Valiant Gold Limited. Scheduled for the third quarter of fiscal 2026, this demerger and concurrent initial public offering (IPO) will see Valiant acquire the Reedy and Comet gold projects located in Western Australia's prolific Murchison region.
The move reflects Westgold’s strategic intent to sharpen its focus on larger, higher-grade core operations while unlocking latent value from smaller, historically productive assets. The Reedy and Comet projects collectively hold a substantial mineral resource base of 15.6 million tonnes at 2.4 grams per tonne gold, equating to approximately 1.2 million ounces of gold.
Valiant’s Growth and Funding Strategy
Valiant aims to raise between $65 million and $75 million through its IPO, priced at 25 cents per share, with a $20 million priority offer extended exclusively to eligible Westgold shareholders. This capital injection will fund exploration, development, and mine restart activities, positioning Valiant to accelerate production timelines.
Crucially, Valiant will enter into an Ore Purchase Agreement (OPA) with Westgold, granting access to Westgold’s established processing hubs at Cue and Meekatharra. This arrangement offers a low-capital, fast-track pathway to cash flow, leveraging existing infrastructure to bring the demerged assets back into production efficiently.
Experienced Leadership and Shareholding Structure
The newly formed Valiant board features seasoned industry professionals, including Derek La Ferla as Non-Executive Chairman and Brendan Tritton as Managing Director. Westgold’s Chief Growth Officer, Simon Rigby, will join as a Non-Executive Director, ensuring alignment between the two companies.
Post-IPO, Westgold is expected to retain a significant equity stake in Valiant, ranging from approximately 44% to 48% depending on the capital raised. This substantial holding allows Westgold to benefit from any upside arising from exploration success and production growth at the spun-out assets.
Unlocking Value from Historic Mines
The Reedy and Comet projects encompass several small underground mines with recent production history, including the South Emu-Triton underground mines. Historically, these assets have produced over one million ounces of gold combined, but have been placed on care and maintenance as Westgold prioritised its core operations.
Valiant’s dedicated management team will focus on reactivating these mines, supported by ongoing exploration to expand resources. The OPA with Westgold provides a clear route to market for ore, mitigating processing risk and capital expenditure.
Looking Ahead
The demerger and IPO are subject to ASX approval and minimum subscription conditions, with completion targeted for late March 2026. Westgold is also providing an interest-free loan facility of up to $3 million to Valiant to support early-stage work ahead of the IPO.
This strategic spin-out exemplifies Westgold’s capital allocation discipline, aiming to maximise shareholder value by enabling a nimble, well-funded junior to unlock the potential of smaller assets while Westgold concentrates on expanding its core portfolio.
Bottom Line?
Valiant’s success in fast-tracking production from these spun-out assets will be a key test of Westgold’s capital efficiency strategy and could reshape value dynamics in the Murchison gold region.
Questions in the middle?
- How will Valiant manage operational risks associated with restarting multiple small underground mines?
- What are the detailed terms and pricing structure of the Ore Purchase Agreement with Westgold?
- How will Westgold’s retained equity in Valiant influence its strategic decisions and potential future consolidation?