Aurelia Metals Limited has announced it has entered into a binding agreement to purchase Cobar’s Peak Gold Mines.
The company, which already owns and operates the Hera Mine near Nymagee, will acquire a 100 per cent interest in the Peak operation as part of a USD $58million transaction.
Peak employees were notified of the sale at a sitewide meeting on Tuesday morning around the same time as New Gold and Aurelia Metals released media statements to the Australian and Toronto stock exchanges.
Aurelia’s managing director and CEO Jim Simpson previously worked as general manager of the Peak Gold Mines for five years until his departure in 2007 and has welcomed the transaction.
“This is a transformative acquisition for Aurelia, delivering a step-change in our production, cash generation and reserves.
“In the process, it is a major step in realising our strategy of creating a leading gold and base metals production company in the Cobar district,” Mr Simpson said.
Aurelia has identified a total funding requirement for the transaction of $140million including replacing current bond requirements for Peak’s operations, paying all transaction costs and stamp duty, plus providing working capital.
The funding will be provided by a combination of underwritten debt facilities and an equity capital raising.
Mr Simpson said Peak is “an ideal growth asset for Aurelia” with plans to continue exploration in the short to medium term.
“Aurelia’s primary focus for exploration will be the upper and lower extensions to the high grade Chronos orebody, depth extensions to Perserverance orebody, depth extensions to the Peak orebody, depth extensions to the Chesney orebody, lateral extensions to the Jubilee orebody and expanding the resources at Great Cobar which has three discrete orebodies.”
New Gold’s president and chief executive officer Hannes Portmann said Peak’s “robust history of replacing and growing its mineral resources” has made a major contribution to New Gold assets.
The sale process is expected to progress during the first quarter of 2018 with Aurelia’s trading halt to be lifted today and share placement details revealed.
Aurelia will have a general meeting for shareholders to ratify the arrangements in mid-January with the share placement expected to go ahead before the end of January.
Assuming the transaction is finalised in the first quarter of 2018, Aurelia is targeting combined production of 100,000-125,000 ounces of gold by the 2018-19 financial year from the Peak and Hera operations.
