GWR plans for $5 million gold spinout

GWR Group has revealed plans to demerge its Wiluna West gold project into a new listed entity, following a major resource upgrade.

GWR, which recently began exporting iron ore from the Port of Geraldton, is planning to launch a $5 million initial public offering of its wholly owned subsidiary and owner of the Wiluna West project, Western Gold Resources.

The offer is priced at 20 cents per share and capped at $7 million.

A successful IPO would allow GWR to focus on its flagship Wiluna West iron ore project, where the company began mining from its C4 deposit in December.

Chairman Gary Lyons said GWR believed now was the time to take advantage of a buoyant gold price.

The company has proposed an in-specie distribution of shares – about 36 million Western Gold shares – to eligible GWR shareholders.

“We believe the Wiluna West gold assets will attract better investor attention and valuation in a standalone entity, while GWR can focus on the development of its remaining assets,” Mr Lyons said.

He said although minimal work had been undertaken on the project in recent years, GWR expected Western Gold would attract the level of capital required to explore the gold project, which covers a 22-kilometre strike of the Joyners Find Greenstone Belt.

The proposed IPO remains subject to shareholder approval, which West Perth-based GWR will seek out at an upcoming general meeting.

GTT Ventures and Lazarus Corporate Finance will act as joint lead managers to the offer.

Today’s announcement comes one week after GWR increased the mineral resource estimate for the Wiluna West gold project by 403,000 tonnes. It now stands at 4.57 million tonnes at 2 grams per tonne of gold for 293,000 ounces of gold.

Shares in GWR closed up 5 per cent to trade at 32 cents.