Westgold (ASX:WGX) boss Wayne Bramwell has become something of a fairy godfather to a bunch of junior gold companies in the Western Australian goldfields.

Enlarged by its 2024 merger with Karora Resources and now sporting a $5.4 billion market cap, Westgold has been hiving of non-core assets to the juniors, offering them a fast-track to production through its milling capacity in the process.

Bramwell calls it Westgold’s optimisation program. Through a combination of cash payments from the juniors and by taking up a shareholding in them, Westgold has been creating some serious value from non-core assets that the market was not valuing anyway.

Bramwell puts the value creation for Westgold at $208M, with more to come as the juniors get their projects in to production and begin to capture the gold producer premium without having to wear the capex cost of building their own  plant.

Previous examples of Westgold spreading the fairy dust around amongst the juniors – with variances in the scale and structure of the deals – include those completed with New Murchison Gold (ASX:NMG), Alicanto (ASX:AQI) and Westgold’s own spin-out baby Valiant (VAL).

All three have been strong performers, comfortably outpacing the rest of the ASX gold sector.

Great Boulder:

The latest junior to benefit from the fairy godfather is Great Boulder (ASX:GBR).

Earlier this week, Westgold agreed to sell Great Boulder its Peak Hill gold project north of Meekatharra in the northern Murchison region of WA for $58.3M in shares and cash, and a 1% NSR royalty.

The share component will make Westgold a 19.9% shareholder in Great Boulder while the cash component of $25m was covered by Great Boulder pulling in $40m from a two-tranche placement at 8.5c a share.

Great Boulder closed at 11c on Thursday for a market cap of $217m on its enlarged issued capital base, with the share price premium to the placement price indicating the market can see the game-changing impact of the Peak Hill pick-up.

No surprise in that. A broad brush assessment is that Great Boulder is now on a fast-track to becoming a 100,000oz per annum gold producer.

With the gold price again knocking on the door of $A6,500/oz, there are plenty of examples of established ASX gold producers in the 100,000oz per annum bracket sporting market caps well north of $1 billion.

So there is lots to play for in Great Boulder chasing down that potential.

It is more doable than would otherwise be the case for the company because the Peak Hill pick-up came with an ore purchase agreement for the ore to be processed at Westgold’s Bluebird mill to the south of Meekatharra.

It came with a non-binding strategic collaboration agreement, also aimed at fast-tracking capital-light production at Great Boulder’s Side Well gold project next to Meekatharra.

The resource at Peak Hill currently stands at 481,000/oz grading 1.6g/t gold while the resource at Side Well stands1.02M/oz resource at 2/g/t.

Great Boulder is now getting busy with the drill bit with funds left over from placement and cash on hand ($25m all up) to grow the resource base at both projects – 40,000m at Peak Hill and 20,000m at Side Well, as well as progressing mine planning and approvals.

It plans to update the mineral resource estimate (MRE) at Peak Hill in six months.

It then aims to have the project, which last produced gold when the price was sub-US$500 an ounce in the 1990s, in “mining-ready” status under the ore treatment agreement within 12 months of the updated MRE.

The existing MRE will likely benefit as a result it being recut to take account of the gold price being in record territory, and what will come from the extensional drilling across the five main deposits in the initial 40,000m drilling program to be undertaken by Great Boulder.

It would not surprise if a one million ounce resource is outlined, if not in the updated in MRE in six months, then in a following MRE update.

Side Well also has lots of resource upside, with some in the market expecting it to grow to the 2 million ounce range in time.

But just taking its existing resource, Great Boulder has essentially gone from being a company with a one million ounce resource (Side Well) without a pathway to production to one with two million ounces in resource (assuming growth to one million ounces in quick fashion at Peak Hill) with a pathway to production.

There is the potential for both Peak Hill and Side Well to be “mine-ready” in a similar timeframe. So the jump up to that 100,000oz per annum run rate possibility suggested earlier could be achieved in quick fashion.

An agreement with traditional owners at Side Well needs to be secured, and there is the question of whether the Bluebird mill could accommodate both projects.

The intention of the agreement between the two companies is that Bluebird – or Westgold’s other mills in the region – will be up to the task.

 Apart from anything else, there is a suggestion that part of Westgold’s optimisation strategy involving the juniors in the region is to have them feeding in 100,000 ounces-a-year to support a doubling of Bluebird’s mill capacity.

It ends up being good for the juniors, and good for Westgold.