Two of Western Australia's most successful gold miners are competing to gain control of Tanami Gold’s Central Tanami project, indicating the growing investor interest in the gold mining sector.
Two of Western Australia's most successful gold miners are competing to gain control of Tanami Gold’s Central Tanami project, indicating the growing investor interest in the gold mining sector.
Northern Star has unveiled a proposal today that is likely to be worth more than $90 million.
Under the terms of the deal, Northern Star will pay $20 million (comprising $11 million in cash and $9 million in shares) to Tanami, in exchange for an initial 25 per cent interest in the gold project.
Northern Star will then take its interest in the joint venture to 60 per cent by sole funding all expenditure and costs required to bring the project back into commercial production.
Northern Star did not disclose estimated costs to bring the project into production, but said it would undertake exploration on some of the tenements at Central Tanami during that time.
Following refurbishment and commencement of operations at the process plant, Northern Star would grant Tanami two options to sell its remaining 40 per cent interest in the project.
The first put option will grant Tanami the right to sell 15 per cent of the project for $20 million in cash or shares, with the second option to allow Tanami to sell the last 25 per cent for $32 million in cash or shares.
The deal is subject to the condition that Tanami terminates the joint venture heads of agreement with Metals X and obtains shareholder approval for the Northern Star proposal.
Under Metals X’s offer, which was announced earlier in the month, the Peter Cook-led company offered about $16 million (comprisng $11 million in cash and four million shares) for an initial 25 per cent stake.
It proposed acquiring a further 50 per cent stake by funding exploraton and development.
Like Northern Star, it also offered $32 million for the final 25 per cent stake.
In a statement, Tanami said it was of the opinion that the Northern Star proposal was superior and intends to vote in favour of the transaction.
“Tanami will seek the required approval of its shareholders in a general meeting,” the company said.
Tanami’s largest shareholder, Allied Properties Resources, which is chaired by Hong Kong lawyer Arthur Dew, has confirmed that it intends to vote in favour of Northern Star’s proposal.
Northern Star shares were 1.3 per cent higher at $2.23 per share at 11:15am.
