Focus Minerals’ is aiming to expand output to more 500,000 ounces of gold per year after one of China’s top gold producers, Shandong Mining, agreed to take a 51 per cent stake in the Perth-based miner.
Focus announced that it had signed a $227.5 million share subscription deed today, which will see Shandong subscribe for approximately 4.55 billion shares, priced at 5 cents each.
The funds raised will be used to support Focus’ ambitions of increasing its output to more than 500,000ozpa through the expansion of the company’s four producing mines near Coolgardie and Laverton, new discoveries through exploration and potential project acquisitions.
As well as the four producing mines, Focus has 1,650 square kilometres of tenement holdings and an existing mineral resource of 4.3 million ounces of gold.
Chairman Don Taig said the backing of Shandong would make Focus a “vastly stronger company”.
“Importantly, the investment represents the commencement of a long-term, mutually beneficial relationship which will allow Focus to unlock the potential of our large tenement holdings and resource base and lays the foundation for Focus to become a significant gold producer,” Mr Taig said in a statement.
“The investment by Shandong Gold will help the senior management of Focus to unlock the company’s growth potential at an accelerated pace.
“Only 4 per cent of our landholding has so far been explored,” Mr Taig said.
Focus was advised by Hartleys and law firm King & Wood Mallesons, while Shandong was advised by PCF Capital and Miner Ellison.
PCF Capital managing director Liam Twigger said the transaction was a landmark deal for the company.
"Our director, corporate advisory Trevor Benson and the team have been working with Shandong Gold for several months now, and as one of China’s three largest gold producers by production, we are pleased to have assisted them in their strategy to invest in an Australian domiciled gold company," he said in a statement.
The transaction remains subject to shareholder and Foreign Investment Review Board approval.
At 9:30AM, WST, Focus stocks were up 4.5 per cent, trading at 4.6 cents.