The London-listed resource investing and exploration company said it is planning a placing of up to GBP4.5mln after entering into a bid implementation agreement for the acquisition of Lake Victoria Gold Ltd (LVG) where it plans to acquire 100% of its shares in issue via a share swap deal.
LVG’s board has recommended that the takeover bid made be accepted by its investors, once MetalNRG’s formal prospectus has been approved, with the placing to provide additional working capital for the enlarged group.
Under the deal, MetalNRG would own LVG and its gold prospecting licences in Tanzania, which are held via wholly owned subsidiary Tanzoz Minerals Ltd (TML).
TML owns mining licence 538, which according to a competent person’s report shared by MetalNRG has a resource of roughly 300,000 oz including a reserve of approximately 90,000 oz.
A 2017 pre-feasibility study calculated that this would be sufficient for economic mining operations at Imwelo in Tanzania, with a net present value of US$23.5mln at a 10% discount rate.
MetalNRG said its objective is for LVG/TML to begin mining and processing at a rate of approximately 12,000 oz per year, with first production of dore gold anticipated to take roughly 12 months from the transaction completion date at a cost of US$5.8mln.
It is then intended that drilling would continue at Imwelo to expand the resource and reserve using cashflow generated from the operations.
MetalNRG said it will seek authority from its shareholders to issue the required shares and issue a new prospectus, while also seeking a combination of equity and non-dilutive project finance for the project to be funded and bring the asset into production as planned.
Rolf Gerritsen, CEO of MetalNRG, said: “We are delighted to have reached agreement with LVG’s board and management. We now look forward to formal approval from the shareholders of LVG and together building a significant gold portfolio.
“The Imwelo project ticks all our investment criteria, near term production, substantial exploration and development upside and a strong management team to deliver the project.
Additionally, it allows MetalNRG to set up a second special purpose vehicle within the group, this one focused and totally dedicated to the development of gold projects, which I believe is a compelling proposition.”
The group’s main focus has been on its Gold Ridge Project in Arizona, where it is reviving three previously-producing gold mines.