Aeris Resources Ltd (ASX:AIS) has entered into a binding agreement with Evolution Mining Ltd (ASX:EVN) to acquire the Cracow Gold Mine in Queensland.
Cracow is an established, high grade, low-cost underground gold mining operation and processing facility operating continuously since 2004, producing more than 1.4 million ounces over its life, with a consistent track record of profitability and reserve replacement.
The mine is on track to produce 82,500 – 87,500 ounces of gold in the 2020 financial year and generate net mine cash flow of $84 to $89 million.
Aeris has agreed to pay Evolution $60 million in cash upon closing of the transaction, a deferred payment of $15 million on June 30, 2022 plus a 10% net value royalty from July 1, 2022 to June 30, 2027, capped at $50 million.
Completion of the transaction is expected to occur on June 30, 2020.
“Truly transformational transaction for Aeris”[hhmc]
Aeris executive chairman Andre Labuschagne said: “This is a truly transformational transaction for Aeris and will be immediately accretive in value.
“The acquisition provides us with asset and commodity diversity, strong cashflow generation and high value synergies.
“Cracow will be a perfect fit for the unique skill set of our management team, who have a track record of extracting value and life extensions, as demonstrated at the Tritton mine, and previously with Norton Gold Fields at the Paddington gold mine. Our immediate focus will be on transitioning Cracow into the Aeris culture and aggressively investing in the mine life extension opportunities we have identified.”
Renewed focus on reinvesting in mine life extension[hhmc]
Labuschagne added: “Aeris inherits a well-run, proven operation which has been a consistent performer for Evolution.
“Importantly for us, there is a strong operating team in place that has a culture of continuous improvement.
“We are confident that Cracow management and the workforce will fit well with Aeris own culture and the renewed focus to reinvesting in mine life extensions which Aeris will bring.”
Funding[hhmc]
Aeris intends to fund the transaction through a fully underwritten $40 million equity raising and a $30 million acquisition bridge debt facility.
A new $15 million guarantee facility has also been secured to provide for the replacement of financial assurances relating to the mine and will be provided by SPOV (Special Portfolio Opportunity V), a subsidiary of a fund managed by PAG.
The equity raising will be conducted via a fully underwritten institutional placement and an underwritten 2.02 for 1 pro-rata accelerated renounceable entitlement offer.
Aeris has already secured commitments from its three largest shareholders, representing about 60% of the register to commit to participating in the equity raising, subject to a maximum holding of 19.99% at completion.
Next steps[hhmc]
The Cracow Gold Mine is about 500 kilometres north-west of Brisbane in a highly endowed goldfield with gold mineralisation hosted in steeply dipping structurally controlled low sulphidation epithermal veins.
The underground mine is accessed through a single surface decline with ore primarily mined via open stoping through a modified Avoca mining sequence.
Cracow has a strong track record of reserve and resource replacement and Aeris plans to aggressively invest in brownfielRead More – Source
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