Mining investment vehicle and project developer Metals One (MET1 ) is to acquire the remaining interests in Lions Bay Resources that it doesn’t already own.
Metals One will exercise its existing option to increase its holding in Lions Bay Resources from 30% to 49.99%. It will also acquire the remaining 50.01% in two other separate share-for-share transactions valued at £6.5 million.
500 million new shares will be issued at 1.3p, along with 125 million 3p warrants.
Lions Bay Resources is looking to acquire significant gold development assets in South Africa.
The plan is to bring the Barbrook gold mine back into production within six months.
Barbrook already boasts a 2.1 million ounce gold resource, an existing processing plant and supporting infrastructure.
In addition, Lions Bay owns a cogeneration plant in Newcastle, South Africa, equipped with a 6 MW steam turbine which may be used to offset Barbrook's power requirements. This asset has a replacement value running into the tens of millions of dollars.
The former chief executive of Harmony Gold, Graham Briggs, will become chair of Metals One following the acquisition.
"Subject to the outcome of the hearing announced on 12 October, this acquisition brings the Lions Bay South African gold and power business wholly and directly into Metals One,” said Daniel Maling, managing director of Metals One.
“This positions our company at the forefront of a South African gold mining opportunity, with a first-class operating team and the former CEO of South Africa's largest gold producer as our chair. This would be a truly transformational transaction for Metals One following its financing and business development initiatives over the last 18 months. Our immediate priorities are to complete the phase 1 Competent Person's Report which will detail the near-term production and mine start-up plan for Barbrook, finalise the mine financing and transaction documentation, and secure the approvals required to complete the acquisitions.”
View from Vox
The value on offer at Barbrook has always been clear, but the historic issues and complex ownership structures have hitherto been an impediment to realising value. The historic issues are gradually being cleared away, and the ownership structure now looks set to be greatly simplified and streamlined in the wake of this new transaction. There’s a huge amount of work still to be done, and Barbrook still needs to be brought out of business rescue, but there’s an experienced team in South Africa ready to go, and Metals One is now headed up as chair by the former chief executive of one of the most prominent gold mining companies in the country. So, a lot to like, and a lot to look forward to.