Westgold Resources Ltd. agreed to acquire privately owned specialist underground mining contractor Australian Contract Mining Pty Ltd. for A$2.5 million cash and 14 million Westgold shares.
The company plans to integrate Australian Contract Mining as the company's internal diversified mining services division, it said June 8.
Australian Contract Mining founder Brian Rodan will continue to be the CEO of the wholly owned subsidiary and will join Westgold's executive management.
The subsidiary will service the company's operations and take on third-party contracting if the opportunity arises, Westgold Managing Director Peter Cook said.
Following the successful commissioning of the process plant at its Fortnum gold project in Western Australia, Westgold is now shifting focus to lowering its cost of mining and making its gold projects flexible and efficient.
The reduction of contractor margins and increased flexibility in mining plans by becoming owner-operator will play a key role in the process, the company noted. Westgold owns and operates two open-pit mining fleets at its Central Murchison gold project, also in Western Australia.
Australian Contract Mining is one of the largest privately owned underground mining and drilling contractors in Australia and has mining contracts in place at three of Westgold's underground gold mines.
The transaction is subject to Westgold completing due diligence on the mining contractor.