Westgold Resources has reached an agreement to divest its South Kalgoorlie operations in Western Australia to Northern Star Resources for a sum of A$80m ($62.45m).

The assets under sale consideration include the project’s operating processing facility, which has a throughput capacity of 1.2 million tonnes per year and approximately 800km² of prospective gold tenure.

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The site is also said to have a Joint Ore Reserves Committee (JORC) compliant resource of 4 million ounces (Moz), including around 250,000oz in reserves.

"Northern Star intends to leverage the acquisition to achieve its production target of 300,000ozpa from organic sources at the Kalgoorlie operations."

Northern Star will be required to issue 9.5 million shares to Westgold at an aggregate cost of A$60m ($46.84m) as part of the total payment consideration, as well as pay A$20m ($15.61m) in cash.

Northern Star executive chairman Bill Beament said: “Our highly successful exploration strategy in Kalgoorlie has generated huge growth in our inventory and paved the way for us to grow production there to 300,000 ounces per annum (ozpa).

“To capitalise on this success, we were considering the option of expanding our Kanowna Belle facility.

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“However, the South Kalgoorlie Operations purchase will enable us to achieve our organic growth target in a more timely and economical fashion, and at the same time provide us with significant exploration potential, including a resource inventory.”

The South Kalgoorlie operations are located 50km from Northern Star’s Kundana operations and currently produce at the rate of 30,000ozpa-40,000ozpa.

Northern Star intends to leverage the acquisition to achieve its production target of 300,000ozpa from organic sources at the Kalgoorlie operations.

The South Kalgoorlie operations had a measured, indicated and inferred resource of 50.9 million tonnes at 2.27g/t of gold as of 30 June 2016.

The transaction is currently slated to be closed by 1 April.