Kanowna makes Oroplata pitch

HOME-GROWN miner Kanowna Con-solidated Gold Mines has announced an off-market takeover bid for Queensland gold player Oroplata Limited to access its Argentinian gold play the Cerro Negro Gold Project.

Oroplata had held a 49 per cent stake in the Argentinian project but upped that to full ownership by making an initial $US500,000 payment on January 20 to MIM/Xstrata.

It still has $US1 million left to pay by next March.

Kanowna is also in the process of renaming itself Andean Resources in light of its South American focus.

Cerro Negro will be its major project.

Kanowna’s offer is 2.05 Kanowna shares for every Oroplata share. On a Kanowna share price of 7 cents, as at May 14, that values Oroplata at a little more than $3.2 million.

Oroplata’s directors have pledged to sell their 51.64 per cent stake to Kanowna.

Indeed, informal discussions over the takeover have been ongoing since December.

If the company’s minority shareholders agree to the formal off-market bid they will hold just under 30 per cent of Kanowna’s expanded issued capital.

It is anticipated the offer, which was expected to be on its way to Oroplata shareholders by the time WA Business News went to press, will close before June 30.

The Cerro Negro project is a highly prospective gold exploration project located in the southern Argentinian province of Santa Cruz with an inferred mineral resource of about 620,000 ounces of gold delineated on part of its ground.

The project covers about 25,000 hectares of mining leases.

Kanowna chairman Warren Gilmour said accelerated drilling efforts are due to begin soon.

The Oroplata acquisition is a return to roots for Kanowna.

In essence it is the conclusion of a journey it began in December.

Kanowna is that classic story of a miner, turned dot.com, turned miner again, although its alternate project was not strictly in the technical field.

It turned to making inclinometers – the kind of thing that graces the dashboards of upmarket four-wheel drives that tell the driver what sort of an angle the vehicle is on – from a factory in Geelong.

Mr Gilmour said that business had since been demerged to Kanowna’s original directors and shareholders and continues as an unlisted company.

"It’s profitable but really just a backyard business," he said.

Mr Gilmour is bullish on the company’s mining prospects.

"This project [Cerro Negro] will be a company maker for us," he said.

"We wanted a project with substance. Something with advanced exploration and not grass roots."

"We couldn’t find anything like that in Australia so we broadened our horizons. Argentina has a suitable political and economic risk profile for us."