Project acquisition moves back into vogue
THE BOURSE WHISPERER: There seems to be a bit if activity around the merger and acquisition area lately with ASX-listed companies doing deals with just as many unlisted companies as they are with their contemporaries.
Gold One Merges West Rand Assets with Sibanye Gold for 17 per cent equity interest
Gold One International (ASX: GDO) is to merge its 74 per cent interest in Rand Uranium and Ezulwini for a consideration of 17 per cent of the ordinary shares of private South African gold mining company Sibanye Gold.
Sibanye Gold is forecast to produce 1.35 million ounces of gold from the company’s Kloof, Driefontein and Beatrix operations, located in the West Witwatersrand and Free State Gold Fieldsin 2013.
It is one of the largest gold producers in South Africa and among the top 10 global gold producers.
Gold One acquired 100 per cent of Rand Uranium for US$250 million in January 2012, and 100 per cent of Ezulwini for US$70 million in July 2012, as part of the company’s strategy for consolidation of South African gold assets with development potential.
Gold One identified Sibanye Gold as a suitable development partner to further advance its South African assets.
Rand Uranium’s Cooke 1-3 underground mines form a well-established gold mining operation with a gold and uranium mineral resource and reserve base.
According to Gold One the mines’ uranium resources provide an opportunity to realise a gold and uranium co-product strategy, which will facilitate reduced unit gold production cash costs with uranium by-product credits.
Ezulwini includes the Cooke 4 underground shaft, which is contiguous to the Cooke 1-3 underground operations.
Gold One considers Ezulwini to be a seamless regional consolidation with the larger Cooke shaft complex.
Ezulwini also has a gold and uranium metallurgical complex that includes a gold plant with a nameplate capacity of up to 200,000 tonnes per month and a uranium plant with a nameplate capacity of up to 100,000 tonnes per month.
This metallurgical complex is able to accommodate the underground ore from all four Cooke shafts.
In addition to the underground operations, Gold One currently operates the Randfontein Surface Operation, which is currently focused on: The optimisation of the current surface operation; The Cooke Gold Plant optimisation project; and the West Rand Tailings Joint Venture project with Sibanye Gold.
“This is an exciting development in the evolution of Gold One,” Gold One acting CEO Christopher Chadwick said.
“As a potential strategic shareholder of Sibanye Gold, we will be able to participate in Sibanye Gold’s growth.
“With its strong cashflow, management expertise and existing asset portfolio Sibanye Gold is well positioned to optimise the significant synergistic opportunities that exist not only within the Cooke Underground Operations and Randfontein Surface Operations, but also between these operations and its existing Beatrix, Kloof and Driefontein mines.
“The joint venture surface tailings treatment project between Gold One’s West Rand assets and Sibanye Gold holds further potential to become a low risk fourth mine for Sibanye Gold.
“With an approximate 17 per cent shareholding we look forward to participating in Sibanye Gold’s growth and translating its success into the development of the Modder East Complex our Modder East Operation and project pipeline.”
Arc Exploration gives notice it intends to proceed with its option to acquire a Queensland gold project
Following completion of its due diligence process Arc Exploration (ASX: ARX) has opted to proceed with an option to farm-in to earn up to 80 per cent of the Mount Garnet gold project located in northeast Queensland.
The project comprises three Mining Leases covering 150 hectares that are 100 per cent-owned by private company Snowmist.
“The decision to proceed with Snowmist’s Mount Garnet project provides the opportunity for ARX to enter another major mineral province in Eastern Australia,” Arc Exploration managing director John Carlile said.
“This is the third Australian project acquired by ARX this year following on from the Junee and Oberon projects announced in July.
“Triple Crown is a gold-breccia pipe that has only a small surface expression but potentially a long depth extension, and has possible linkages with larger mineralised intrusions and skarns in the Mount Garnet district.
“We see strong similarities with other gold-breccia pipes in the region, such as Mungana and Red Dome at Chillagoe, as well as Mt Wright and Welcome Breccia at Ravenswood.
“Triple Crown has only been tested to a shallow depth of around 200m depth and we believe that there is potential to increase the current gold resource by deeper drilling.
“We also aim to generate new targets elsewhere on the leases using the detailed geophysical and geological databases established by previous explorers.”
Key commercial terms of the deal are:
Arc Exploration has entered a two-year option period for a payment of $50,000 to Snowmist and a minimum expenditure of $150,000 during the option period;
Arc Exploration may then earn a 51 per cent interest by sole funding $500,000 within two years; and
Arc Exploration may then earn up to an 80 per cent interest by sole funding a further $580,000 within a further one year period.
The project is located in the historic Mount Garnet mining district of the Hodgkinson Province, where tin and base metals have been produced from vein-lodes and skarn deposits.
The project lies in the same belt of rocks that hosts major intrusion-related gold-base metal stockwork and skarn deposits – such as Red Dome and Mungana – in the Chillagoe district, located about 90km to the northwest.
Snowmist’s mining licences encompass several gold-breccia prospects including the Triple Crown gold deposit that was discovered in the early 1980’s.
Triple Crown contains a gold resource estimated to be about 69,000 ounces hosted in a quartz-sulphide breccia pipe and stockwork.
Arc Exploration plans to initiate a program of geophysical and geological interpretation and targeting in an effort to expand the known resource during the initial two-year option period.