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Westgold Karora Merger Information

Merger to Create +400 kozpa1 Australian Gold Miner – Fully Leveraged to the Gold Price

Transaction Highlights: 

  • Westgold Resources Limited (ASX: WGX, OTCQX: WGXRF – “Westgold”) and Karora Resources Inc. (TSX: KRR, OTCQX: KRRGF – “Karora”) have agreed to combine in a merger pursuant to which Westgold will acquire 100% of the issued and outstanding common shares of Karora by way of a statutory plan of arrangement under the Canada Business Corporations Act (“Transaction”).
  • The Transaction represents a transformational step change in growth for both Westgold and Karora shareholders:
    • Creates a globally investable, mid-tier gold producer operating exclusively in Western Australia with a highly complementary combination of mining and processing assets, people and balance sheet;
    • Top 5 largest, ASX listed Australian gold producer based on the pro forma market capitalisation with combined Ore Reserves of 3.2Moz2 and Mineral Resources of 13Moz3;
    • One of the largest unhedged Australian gold producers on completion of the Transaction providing investors with full exposure to the gold price4;
    • Combined pipeline of advanced organic growth options and exploration targets across Karora’s Beta Hunt and Higginsville properties and Westgold’s Murchison and Bryah properties;
    • Estimated operating synergies5 of A$209 million (C$187 million6) and estimated corporate savings7 of A$281 million (C$251 million6);
    • Robust balance sheet with financial resources of circa A$160 million (C$143 million6) in cash and liquidity through Westgold’s existing corporate revolver facility (subject to requisite consents) and following full repayment of Karora’s existing A$44 million (C$39 million6) revolving facility to support an accelerated resource development program at the Beta Hunt Fletcher Zone and Bluebird-South Junction;
    • Enhanced capital markets profile with increased scale, trading liquidity and quality to be attractive to both gold and generalist investors across ASX, TSX and OTCQX;
    • Significant re-rating potential via increased scale and increased index weighting, such as the GDX and GDXJ indices; and
    • Combined board of directors comprising experienced mining professionals with a proven track record of maximising value for shareholders.

"This merger brings Beta Hunt together with Big Bell, the emerging Bluebird and the iconic Great Fingall mine under one Australian management team. These assets combined create the foundations of a new Australian gold mining powerhouse."

- Wayne Bramwell, Westgold Managing Director and CEO

1 Based on Karora's TSX announcement " Karora Announces First Quarter Gold Production of 36,147 ounces, Gold Sales of 40,343 Ounces and a cash position of C$87.3 million" dated 5 April 2024 filed by Karora on SEDAR+ (www.sedarplus.com) in accordance with NI 43-101, and Westgold's ASX announcement titled "Q3 FY24 Production Update" dated 3 April 2024 lodged by Westgold on the ASX Market Announcements Platform (ww.asx.com.au). All material assumptions underpinning the Westgold production target as announced on that date continue to apply and have not materially changed.

2 Comprising existing Westgold JORC Ore Reserves and Karora NI 43-101 Mineral Reserves (refer to the Karora - Foreign Estimate Disclosures in Schedule 1 for further information). Westgold cautions that the NI 43-101 Mineral Reserves for Karora are foreign estimates and are not reported in accordance with the JORC Code. A Competent Person has not done sufficient work to classify the NI 43-101 Mineral Reserves as JORC Code Ore Reserves in accordance with the JORC Code. Full details of Westgold's JORC Mineral Resources and Ore Reserve estimates are provided in the report titled "Westgold 2023 Mineral Resources and Ore Reserves" released to the ASX on 11 September 2023 and is available at www.westgold.com.au. Westgold confirms that it is not aware of any new information or data that materially affects the information included in that announcement and, in the case of estimates of Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the announcement continue to apply and have not materially changed.

3 Comprising existing Westgold JORC Mineral Resources and Karora NI 43-101 Mineral Resources (refer to the Karora - Foreign Estimate Disclosures in Schedule 1 for further information). Westgold cautions that the NI 43-101 Mineral Resources for Karora are foreign estimates and are not reported in accordance with the JORC Code. A Competent Person has not done sufficient work to classify the NI 43- 101 Mineral Resources as JORC Code Mineral Resources in accordance with the JORC Code. Full details of Westgold's JORC Mineral Resources and Ore Reserve estimates are provided in the report titled "Westgold 2023 Mineral Resources and Ore Reserves" released to the ASX on 11 September 2023 and is available at www.westgold.com.au. Westgold confirms that it is not aware of any new information or data that materially affects the information included in that announcement and, in the case of estimates of Mineral Resources, that all material assumptions and technical parameters underpinning the estimates in the announcement continue to apply and have not materially changed.

4 Westgold currently has outstanding zero cost collar contracts for contingent delivery of 2,500 oz Au per month to June 2024.

5 Operating synergies are based on, but not limited to, forecast savings relating to consumables, capital cost savings through optimisation of equipment, site administration, and staff attraction and retention etc that the larger combined entity's market presence is expected deliver and has been calculated as a 5% saving of 60% of the combined operating costs over the current 10 year life of mine plan.

6 Based on AUD:CAD 0.8941 on 5 April 2024.

7 Corporate synergies are based on, but not limited to, closure of multiple Karora North American offices, reduction in overhead and removal of duplication of some administrative functions.