Dual-listed gold junior Aureus Mining will also use the proceeds of the fundraising to repay amounts due to its lenders Nedbank and FirstRand Bank, and to strengthen its balance sheet.
The company has conditionally raised the required equity through the issue of 3.9 billon new common shares at 1.5p per share.
The transaction will comprise of 3.25 billion shares issued to its major shareholder MNG Gold at 1.5p per share pursuant to the subscription to raise US$60 million, and 650 million shares issued to institutional investors at 1.5p per share pursuant to the principal placing, to raise US$12 million.
As soon as reasonably practicable following completion of the fundraise, Aurues Mining will, through its wholly owned subsidiary Bea Mountain Mining Corporation (BMMC), complete the acquisition by:
- Acquiring the mining equipment for a cash consideration of US$15.4 million from MNG Gold-owned Liberian company Atmaca Services at no gain or loss;
- Acquiring the inventory on-site (currently estimated at US$7.1 million) at closing from Atmaca Services at no gain or loss; and
- Paying to Atmaca Services a fee of US$4.5 million to terminate the contract, being the same amount as the novation fee paid by Atmaca Services to MonuRent.
In addition, the former MonuRent employees will transfer from Atmaca Services to BMMC on the same terms and conditions thereby achieving the transition of BMMC to owner-operator of the mining operations at the New Liberty mine.
This transition to an owner-operator model could result in cost savings of approximately US$1.5 – 2.0 million per month and significantly improve the operational and financial flexibility of Aureus.
The placing and the subscription are conditional upon minority shareholder approval being obtained for the subscription (which is proposed to be sought on or around 29th November 2016 at a special meeting of shareholders) and the approval of the Toronto Stock Exchange (TSX).
The placing is also conditional on minority shareholder approval being obtained for the acquisition and the acquisition and the subscription becoming unconditional.
It is expected that dealings in the shares to be issued pursuant to the fundraising will commence on 6 December 2016 and that the acquisition will complete shortly after admission to trading.
Following completion of the fundraise MNG Gold will hold 69.3% of the company’s share capital as enlarged by the fundraise.
In addition, further to its initial investment in the company in July 2014, the International Finance Corporation (IFC), the private sector arm of the World Bank Group, which currently has a shareholding in Aureus of approximately 1.7% has the right, but not the obligation, to maintain its pro rata shareholding in any equity financing undertaken by the company, including the fundraise.
“The fund raise provides the key to unlock the significant value from Aureus’s high grade assets. We have been very encouraged by the significant support from a broad range of investors, as well as by the significant progress MNG Gold has made in turning around the New Liberty mine since taking control only as recently as 15th July this year, says Aureus CEO Serhan Umurhan.
Aureus Mining will also be seeking the authority of the shareholders to change the name of the company to Avesoro Resources. If shareholders vote to approve the change of name at the special meeting, the company also intends to change its TIDM code to ASO on both AIM and the TSX, effective on or around the date of admission of the shares to AIM and TSX.