04/07/2008 - 09:08

Beadell scraps Cracow mine purchase

04/07/2008 - 09:08

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West Perth-based Beadell Resources Ltd will have to put its goal of stepping into the miner's sphere on hold, after turbulent market conditions stopped the company from raising equity to purchase a share of the Cracow gold mine.

West Perth-based Beadell Resources Ltd will have to put its goal of stepping into the miner's sphere on hold, after turbulent market conditions stopped the company from raising equity to purchase a share of the Cracow gold mine.

The company said in a statement that prevailing market conditions had prevented the completion of the raising to fund its acquisition of Newcrest Mining Ltd's 70 per cent share of the Queensland mine.

Beadell's $2 million deposit plus interest paid to Newcrest will be refunded. Beadell had originally agreed to purchase Newcrest's stake for $200 million.

The failed equity raising has also affected Beadell's purchase of the remianing 30 per cent share of Cracow, which was held by resource investment fund Lion Selection Ltd.

Today Lion said the sale of its Cracow interest, which would have fetched $80 million, will also not proceed. Lion added that Newcrest now as an option to acquire Lion's Cracow share for the same price.

The option expires at the end of October.

The news saw Beadell's share price slump nearly 30 per cent to a low of 24.5 cents in early trade today.

While the deal may be off the table, Beadell said Newcrest has expressed a willingness to work with Beadell to identify future opportunities that are of mutual benefit.

"We have developed a strong relationship with Newcrest over the past 12 months whilst progressing the Cracow Acquisition and we now look forward to working together to identify opportunities that work for both parties," Neadell managing director Peter Bowler said.

"We continue to be excited about our ongoing exploration effort in both Australia and Brazil. Our strong cash position enables us to fully evaluate these projects and we expect some real upside to unfold as the year progresses."

In May, Beadell had planned to undertake a $300 million equity and debt raising to fund the acquisitions of Newcrest's 70 per cent interest in Cracow, and Lion Selection Ltd's 30 per cent interest.

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