Agincourt Resources Ltd has announced a $100 million placement to acquire Newmont Mining Corporation's Sumatra-based Martabe gold and silver project, in a deal that will also make the US giant the biggest shareholder in the West Perth company.
Agincourt Resources Ltd has announced a $100 million placement to acquire Newmont Mining Corporation's Sumatra-based Martabe gold and silver project, in a deal that will also make the US giant the biggest shareholder in the West Perth company.
The company's placement of 86.96 million shares at an issue price of $1.15 will be settled in two tranches, the first being an issue of 12.7 million shares to commence ASX trade on July 28. The remaining 74.2 million shares will is conditional upon shareholder approval, to be sought at a general meeting planned for 24 August.
Agincourt also plans to place 43.48 million shares with Newmont, giving it approximately 20 per cent ownership of the business, in exchange for Newmont's $50 million Agincourt investment.
Denver-based Newmont said in April it had decided to sell the Martabe gold mine because its gold deposits were deemed unprofitable.
Newmont purchased it in 2002, but the site is still at the exploration stage and has not yet produced gold.
Agincourt has also entered into a joint venture with an Indonesian consortium led by the Dharmawangsa Group. The joint venture partners have an option to acquire up to 30% of Martabe via a pro-rata contribution of the acquisition and development costs.
Agincourt and the joint venture partners have also agreed that local government interests in Sumatra, Indonesia will be offered a 5% "contribute or dilute" interest in Martabe. Under the joint venture Agincourt will retain a minimum of 67% in Martabe, and will operate the mine on behalf of the joint venture.
The Dharmawangsa Group is a privately owned Indonesian group of companies with extensive interests in mining, oil and gas, power, real estate and construction. The group has interests in the same province as Martabe, and excellent relationships with the central and provincial Indonesian governments.
Wilson HTM and Deutsche Bank AG are the joint lead managers and underwriters for the placement, which will also fund feasibility studies of Martabe and further drilling at Agincourt's Wiluna prospects.
By 1420 AEST Agincourt shares had tumbled 28.74 per cent or 48 cents to $1.19. Newmont shares fell three per cent or 21 cents to $6.77.
The full Agincourt announcement is pasted below
Agincourt Resources Limited (Agincourt) is pleased to announce an Agreement to acquire the multi-million ounce Martabe Gold and Silver Project (Martabe) in Indonesia from Newmont Mining Corporation (Newmont).
Agincourt is also pleased to announce the successful equity capital raising of A$150 million to fund, inter alia: the acquisition price, completion of the bankable feasibility study and environmental approvals.
Bob Gallagher, Newmont's Vice president Indonesian and Australian Operations said "The sale of Martabe is part of Newmont's ongoing commitment to optimising its asset portfolio and focusing on its core gold operations and development projects.Martabe is best suited to a company like Agincourt, who will develop the project as soon as possible, in the best interests of both the Government of Indonesia and its people."
Martabe, located in Sumatra, Indonesia, is one of the most attractive undeveloped gold projects globally, with a JORC resource1 of 5.3 million ounces of gold and 54.8 million ounces of silver hosted within a large epithermal system. The Martabe Contract of Work (CoW) covers over 2,500 km2 of highly prospective terrain. The addition of Martabe to Agincourt's operating mine at Wiluna, Western Australia and the Andorinhas Gold Project in Brazil elevates Agincourt to the position of the 7th largest Australian listed gold company by resource ounces. With all mines in production it has the potential to increase Agincourt's total gold production to 500,000 (gold equivalent) ounces per annum (based on a 100% Martabe interest).
Agincourt will acquire a 100% interest in Martabe at an acquisition cost of US$80.25 million, representing a gold equivalent resource price of less than A$18 per ounce.
Another attractive feature of the Martabe tenements is the potential to rapidly increase the resource inventory. Agincourt estimates resources could be increased by at least 1 million ounces. This potential is supported by:
- Newmont identified mineralisation at prospects that are yet to have a JORC compliant resource estimated by Agincourt;
- Approximately 17,000m of existing drill results that are yet to be included in the resource model; and
- Excellent identified "walk-up" drill targets.
A Joint Venture (JV) has also been formed with an Indonesian consortium led by the Dharmawangsa Group (JV Partners). The JV Partners have an option to acquire up to 30% of Martabe via a pro-rata contribution of the acquisition and development costs. Agincourt and the JV Partners have also agreed that local government interests in Sumatra, Indonesia will be offered a 5% "contribute or dilute" interest in Martabe. Under the JV Agincourt will retain a minimum of 67% in Martabe. The JV will own Martabe, which will be operated on behalf of the JV by Agincourt.
The Dharmawangsa Group is a privately owned Indonesian group of companies with extensive interests in mining, oil and gas, power, real estate and construction. The group has interests in the same province as Martabe, and excellent relationships with the central and provincial Indonesian governments.
Wilson HTM and Deutsche Bank AG, (Deutsche Bank) are the Joint Lead Managers and Underwriters for the placement of 86.96 million shares at an issue price of A$1.15 per share to raise approximately A$100 million. Up to an additional A$50 million is being invested by Newmont at the same issue price. The placement brings several new international and domestic institutional investors on to the register as well as increasing the holdings of existing institutional shareholders. It will also make Newmont, one of the world's leading gold producers, Agincourt's largest shareholder with approximately 20% of the shares on issue. Newmont's shareholding in Agincourt will be placed in escrow for a term of 12 months.
The Placement will be settled in two tranches. The first tranche (12,716,742 shares) is expected to settle on 27 July 2006 and commence trading on the ASX on 28 July 2006. The issue of the second tranche (74,239,780 shares) is conditional on shareholder approval, which will be sought at a general meeting of the Company planned for 24 August 2006. The issue of up to 43.48 million shares to Newmont is also conditional on approvals from shareholders and the Foreign Investment Review Board.
In addition to the Placement the Company will undertake a Share Purchase Plan (SPP). The record date for the SPP is 7 August 2006 and eligible shareholders will be entitled to apply for up to 4340 Agincourt shares at A$1.15 per share, (worth $4,991), being the same issue price under the Placement. Documentation for the SPP will be despatched on or about 8 August 2006.
The proceeds from the issue of new shares will be used to fund:
- The acquisition of Martabe;
- Costs related to the acquisition;
- Completion of the Bankable Feasibility Study;
- Further exploration drilling at Martabe;
- Environmental approval and land acquisition costs;
- Other costs and working capital up to financial close for Martabe project development;
- Wiluna exploration drilling;
- Andorinhas pre-feasibility study; and
- General working capital.
Development of Martabe will become the primary focus for the Company over the next 24 months.
