Metals One (MET1 ) is inching closer to completing the acquisition of a sizeable position in South African gold development and production. The deal is being done via its interest in Lions Bay Resources, in which it holds 30%, with the option to go to 49.9%.
In the latest development, Lions Bay Resources has submitted two revised offers for the assets in question to the Business Rescue Practitioner in South Africa.
The first is a US$17 million offer for the assets of Barbrook Mines Ltd, which holds a historic gold resource of 2.1 million ounces.
The second is an offer for Makonjwaan Imperial Mining Company, which holds the Lily Mine and associated deposits totalling 2.3 million ounces of gold for a nominal sum of ZAR 1.00
As part of the Barbrook offer, upon approval by creditors, Lions Bay has agreed to pay the full salary claims of the former employees of MIMCO as well as Barbrook.
The revised offers follow the adjournment of the creditor meeting to approve Lions Bay Resources’ plan to acquire the Vantage assets by the Business Rescue Practitioner.
Lions Bay’s revision of the offers to focus on Barbrook is a function of feedback from the creditors meeting and circumstances around the Lily Mine complex.
Lions Bay’s proposed acquisitions of the assets of Vantage out of Business Rescue has been endorsed by the Business Rescue Practitioner and the major creditor, and was recently circulated to all creditors.
Lions Bay has previously deposited US$10 million in an escrow account with the Business Rescue Practitioner's legal practitioner. Upon approval of the plan, funds will be deployed, and staff will be paid 100% of their entitlements, less any amounts previously settled by the major creditor, while creditors will be paid 10% of their approved claims.
The 90% balance will be paid to creditors once the Section 11 application has been granted, which relates to the transfer of mining rights.
LBR is considering confidential offers for project level financing for the balance of funding required to complete the Barbrook and MIMCO acquisitions alongside additional initial mine startup capital.
The revised offers remain subject to the agreement of creditors at the creditors meeting expected to be held tomorrow.
"Following further constructive dialogue with the Business Rescue Practitioner and major creditor, LBR has reshaped its offer and looks forward to the outcome of the adjourned creditor meeting reconvened for tomorrow," said Daniel Maling, managing director of Metals One.
View from Vox
This transaction is still live, with no guarantees that it will complete. Still, the signs are good. The Business Rescue Practitioner and the major creditor are on board, and Lions Bay Resources has shown itself to be flexible in its approach. Securing the remaining funding ought not to be too troublesome in the current market, with gold strong again, and pushing once more towards US$5,000. We await the outcome of the creditors meeting tomorrow.