Aureus Mining, the TSX/AIIM-listed gold junior, says the transaction will strengthen its balance sheet and fund working capital as it completes the restart of the processing plant at the New Liberty gold mine in Liberia, expected mid-June 2016.
The $30 million equity investment at 3.21p per share represents a premium of 22.3% to the closing price on AIM on 14 June 2016.
Following the deal, MNG Gold will become a 55% shareholder in Aureus and appoint three representatives to the board. CEO David Reading (as shown in the above photograph) will resign and MNG general manager Serhan Umurhan will take his place.
[quote]MNG Gold has exploration, development and production assets in Turkey, Burkina Faso and Liberia. It is owned by Mehmet Nazif Gűnal who also has interests in construction and contracting, tourism, air carriage, cargo carriage, finance and energy.
The funds raised are to be used to reduce outstanding creditor balances, bolster working capital and facilitate the ramp up of the processing plant which is scheduled to be restarted from mid-June 2016.
Aureus Mining has received credit approval from its lender group (Nedbank, FirstRand Bank (acting through its Rand Merchant Bank division) and the Export Credit Insurance Corporation of South Africa for a four month default waiver and standstill agreement during which time the company will work with the lenders to reschedule the debt repayment profile.
Equity financing overview
The financing will be completed as a non-brokered private placement with two tranches as follows:
- Tranche 1: 59,533,674 common shares of the company at a price of 3.21p per share and a promissory note in the aggregate principal amount of $12.3 million to MNG Gold for aggregate gross proceeds of $15 million at closing; and
- Tranche 2: 331,111,209 shares at a price of 3.21p per share to MNG Gold for aggregate gross proceeds of $15 million to be completed upon clearance by the TSX of the personal information forms respecting Mehmet Nazif Gűnal and Murathan Doruk Gűnal, and any other personal information forms required by the TSX in order to complete Tranche 2 and make the Promissory Note convertible.
Further board and management changes
Upon completion of the transaction the following changes will also be made to the board and management of the company:
- CFO – Paul Thomson will resign, but continue for 12 months in a consultancy role. Geoff Eyre, currently CFO of MNG Gold, will be appointed as CFO; and
- Board – Mehmet Nazif Gűnal will join the board as non-executive chairman. Serhan Umurhan and Geoff Eyre will join the board as directors. David Netherway, Loudon Owen and Jean-Guy Martin will continue as non-executive directors of the company. Karin Ireton and Adrian Reynolds will resign as directors of the company.
The above appointments are subject to the completion of satisfactory due diligence by the company’s nominated adviser and relevant TSX approvals.
“Within five years, the Aureus Mining team has overseen the exploration, development and commissioning of New Liberty, Liberia’s first ever commercial gold mine. During this time, the company has faced the significant challenges of the tragic Ebola virus and the financial constraints of the global mining downturn,” says David Netherway, chairman of Aureus Mining.
“More recently, there have been operational challenges that, while not unusual at the early stages of commissioning and operations, reduced anticipated cash flows. The recent plant suspension has added to financial pressures faced by the company.”
The Aureus Mining board formed a Special Committee in January of this year to conduct a review of the strategic options available to enhance shareholder value.
“We believe that this transaction, which will result in MNG Gold becoming a major shareholder, will provide Aureus with an exciting future as we prepare to restart production at New Liberty and aim to optimise the asset to deliver on its full potential.”
“New Liberty is an attractive opportunity to add high quality ounces to our West African mining portfolio. We see significant growth potential for New Liberty, supported by our strong financial position, global mining expertise and synergies with our other Liberian operation. MNG Gold is committed to responsible and sustainable mining and to creating long lasting benefits to the community,” says Serhan Umurhan, general manager of MNG Gold and incoming CEO.