|Wednesday, 30 May 2012Tania Winter|
PHILIPPINES-focused and tri-listed Mindoro Resources is spinning out its gold and copper-gold assets into listed Australian vehicle Red Mountain Mining in a deal valued at $A15 million as it continues talks on a strategic partnership for its Agata nickel property.
|Drilling at Agata|
The assets to be vended include the Batangas gold project including Archangel and Lobo, which host indicated resources of 10.15 million tonnes grading 1.2 grams per tonne gold for 393,000 ounces and an inferred 3.8Mt at 0.88gpt gold for 108,000oz, and a 75% stake in the Tapian San Francisco copper-gold properties near Surigao.
Both parties have signed a non-binding, conditional term sheet and expect to formally ink the deal on June 15 after finalising due diligence, with completion of the sale by mid-August.
Under the deal, Red Mountain will initially pay $10 million to Mindoro in the form of 100 million non-voting shares at 10c a share, with a further $5 million in the form of 50 million performance shares at 10c per share.
Red Mountain will also provide a secured draw-down facility for up to $1 million to enable Mindoro to start drilling in July, focused on delineating high-grade feed structures below the Kay Tanda resource at Archangel, Batangas.
The loan will accrue interest at the rate of 5% per annum and will be secured by a charge over Mindoro subsidiary MRL Gold (Australia), which holds the assets, and a guarantee from Mindoro. If the acquisition does not proceed, the loan and accrued interest must be repaid within three months.
Following the transaction, current Red Mountain shareholders will retain around a 35% to 44% interest in the expanded group.
These convert to non-voting shares once indicated resources at Batangas reach 600,000oz and on completion of a scoping study within 12 months of finalising the deal.
Subject to Australian Securities Exchange, TSX Venture Exchange and Mindoro shareholder approval, the non-voting shares will carry full economic rights but will not carry any voting rights until such time that the non-voting shares are distributed to Mindoro shareholders.
Mindoro president and chief executive Jon Dugdale said the separation of the key gold and copper-gold projects from the more Agata play provided the company the opportunity to unlock optimal value for its assets.
On conclusion of the deal, Dugdale will become an executive director of Red Mountain and within nine months will hopefully transition to the role of managing director, while Mindoro’s vice-chairman Howard Walker will become a non-executive director.
During that time, Red Mountain’s chairman and acting chief executive, ex-Barminco chief Neil Warburton, will become non-executive chairman.
In addition, Red Mountain intends to appoint current Mindoro executive Howard Walker to its board as a non-executive and will retain Michael Wolley and Keith Rowe as non-executives.
Meanwhile, Mindoro remains in advanced talks with a group aiming to secure a stake in the Agata nickel property through providing funding to establish direct shipping ore production and complete pilot testing and a definitive feasibility study into a hydrometallurgical acid-leach processing operation.
The company is aiming to establish a strategic funding partnership to accelerate a two-stage development strategy including stage 1 DSO production and stage 2 hydrometallurgical processing to definitive feasibility study.
It is working with its financial advisor Deloitte Corporate Finance and hopes to finalise a preliminary deal shortly.
Agata itself hosts proved and probable reserves of 35.4 million tonnes grading 1.03% nickel for a contained 365,000t of metal, and measured and indicated resources of 42Mt at 1.01% nickel for 430,000t of nickel.
Shares in Mindoro were unchanged in morning trade on 5.5c, as were shares in Red Mountain on 9.5c.
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