Metals One to acquire all shares in Lions Bay Resources
Metals One has entered into a binding term sheet with TSX-V-listed Lions Bay Capital, Salamander Consulting and Lions Bay Resources (LBR) for the proposed acquisition of the remaining interests in LBR that the company does not already own.
Under the revised structure, Metals One intends to exercise its existing option to increase its interest in LBR from 30% to 49.99%, as well as to acquire the remaining 50.01% from Lions Bay Capital and Salamander through two separate share-for-share transactions.
On completion of both proposed transactions, LBR will become a wholly owned subsidiary of Metals One.
This replaces the transaction structure announced in June, under which LBI was to acquire 100% of LBR.
The revised structure is intended to consolidate the South African gold mining and power business within Metals One, providing access to capital markets to support the development of a new South African gold and power business, with a defined strategy to bring the Barbrook gold mine, in Mpumalanga, back into production within six months.
Former Harmony Gold CEO Graham Briggs is set to become the chairperson of Metals One following the acquisition, supported by a South African operating team.
Metals One will settle the £6.5-million purchase price for the remaining 50.01% of LBR through the issue of 500-million new Metals One shares, together with the issue of 125-million warrants.
LBR’s proposed acquisition of the Barbrook mine will add an asset with a historical 2.1-million-ounce gold resource, an existing processing plant and supporting infrastructure with a plan to restore production within six months.
LBR owns a cogeneration plant in Newcastle, South Africa, equipped with a 6 MW steam turbine (the plant has an independently assessed replacement value of $39.6-million) which may be used to offset Barbrook’s power requirements.
Metals One outlines a phased restart plan at Barbrook targeting initial gold concentrate production within six months using the plant and infrastructure already in place.
“This acquisition brings the Lions Bay South African gold and power business wholly and directly into Metals One. This positions our company at the forefront of a South African gold mining opportunity, with a first-class operating team and the former CEO of South Africa’s largest gold producers as our chair.
“This would be a truly transformational transaction for Metals One following its financing and business development initiatives over the last 18 months,” Metals One MD Daniel Maling highlights.
“Our immediate priorities are to complete the phase 1 Competent Person’s Report which will detail the near-term production and mine start-up plan for Barbrook, finalise the mine financing and transaction documentation, and secure the approvals required to complete the acquisitions,” he adds.
Metals One is awaiting the final judgment from the court proceedings announced earlier this month, and in the interim, LBR is progressing the remaining requirements to complete its acquisition of Barbrook under the business rescue plan.