Corazon Mining to Acquire Western Australia Gold Project From Westgold Resources in AU$26 Million Deal; Shares Tumble 18%

Corazon Mining (ASX:CZN) agreed to acquire the Chalice gold project in Western Australia from a Westgold Resources (ASX:WGX) subsidiary for about AU$25.7 million, according to a Tuesday filing with the Australian bourse.

The consideration includes AU$8 million in upfront cash, around AU$6.7 million in shares of Corazon, and AU$11 million in deferred cash payments linked to certain milestones, per the filing.

Additionally, Corazon has received firm commitments to generate AU$16.5 million at AU$0.14 per share through a placement, subject to shareholder approval, to finance the deal's upfront consideration. Westgold will own nearly 20% of Corazon after the acquisition and placement are completed.

The last mining at Chalice took place in September 2014, and the project has a current mineral resource estimate of 191,000 ounces at 2.7 grams per tonne grade of gold. Corazon said it will immediately launch a 15,000 meters drilling campaign at the site to extend the known mineralization and test new targets.

Westgold Resources shares gained almost 2% in recent Tuesday trade, while Corazon Mining tumbled 18%.