Forrestania Signs $48/Tonne Ore Contract for 150,000 Tonnes with Westgold
Forrestania Resources has signed a binding ore purchase agreement with Westgold Resources, marking its official transition to gold production with an initial $7.2 million parcel of ore.
- Binding Ore Purchase Agreement with Westgold for Gibraltar Gold Project ore
- Initial 150,000 dry tonnes parcel valued at approximately $7.2 million
- Potential for up to 750,000 dry tonnes across four parcels
- $2 million commencement payment upon conditions met
- Forrestania to manage grade control, mining, and haulage to Higginsville Processing Hub
A Defining Moment for Forrestania Resources
Forrestania Resources Limited (ASX: FRS) has taken a significant step forward in its evolution from explorer to producer with the execution of a binding Ore Purchase Agreement with Westgold Resources Limited (ASX: WGX). This deal, centred on ore from Forrestania’s 100%-owned Gibraltar Gold Project, signals the company’s official transition into gold production.
The initial parcel under the agreement involves approximately 150,000 dry tonnes of ore, with Westgold paying $48 per dry tonne delivered and certified. This translates to gross proceeds of around $7.2 million for Forrestania, alongside a $2 million upfront commencement payment once standard conditions are met. Importantly, the contract allows for up to three additional parcels of 200,000 dry tonnes each, potentially expanding the total volume to 750,000 tonnes.
Operational Control and Strategic Positioning
Unlike many ore sales agreements where the seller’s role is limited, Forrestania will retain operational control over grade control drilling, mining, and haulage to Westgold’s Higginsville Processing Hub. This hands-on approach is designed to build the company’s internal capabilities and operational systems, laying the groundwork for the staged development of its broader Lake Johnston project.
Grade control drilling is already underway, with assays being processed promptly through SGS Australia’s Perth facility. Metallurgical testing is being conducted by NAGROM in Perth to ensure ore quality and recovery parameters meet contract requirements. This operational involvement not only supports near-term production but also provides valuable experience that will inform Forrestania’s future mining activities.
Financial and Strategic Implications
The agreement delivers immediate cash flow and strengthens Forrestania’s funding position, a crucial factor as the company advances its gold production ambitions. Removing historic stockpiles will also free up working space at the Gibraltar site, enabling further exploration and potential expansion of mineralisation near historic underground workings.
Chairman David Geraghty highlighted the significance of this milestone, noting that the deal positions Forrestania as a new gold producer in Western Australia. The company’s strategy to consolidate ground near existing processing infrastructure has paid off, allowing it to monetise assets while building operational expertise.
Looking Ahead
Forrestania’s transition to production is a critical phase that will test its ability to manage mining operations effectively and deliver on contractual commitments. Success here could pave the way for further development of its Lake Johnston project and expansion across its portfolio in Western Australia’s highly prospective gold belts.
As Forrestania moves from developer to producer, the market will be watching closely to see how the company leverages this agreement to build scale and create shareholder value in a competitive mining landscape.
Bottom Line?
Forrestania’s ore deal with Westgold sets the stage for its emergence as a gold producer, but execution risks remain as it scales operations.
Questions in the middle?
- Will Forrestania secure and execute the additional ore parcels beyond the initial shipment?
- How will metallurgical test results impact the timing and volume of ore deliveries?
- What are the long-term plans for expanding production beyond the Gibraltar Gold Project?
