[miningmx.com] – GOLD exploration firm, Range River Gold, is to make a share-based bid for Sydney- and Johannesburg-listed Firestone Energy which is developing the $400m Waterberg Joint Venture thermal coal project in South Africa’s Limpopo province.
Range River Gold, which digs for gold in Australia’s Victoria and Western Australia territories, said it would offer one share for every two Firestone Energy shares. The offer represents a 25% premium to Firestone Energy’s December 13 close, valuing the company at A$30m or R270m. Range River Gold has a current market capitalisation of A$6.2m or R54m.
Firestone Energy’s board, represented by CEO David Knox, recommended the firm’s shareholders do nothing at the current stage until a bidder’s statement had been lodged with the Australian Stock Exchange (ASX) where Range River is listed.
A 50.1% majority of Firestone Energy shareholders is required for Range River’s bid to be successful.
A conditional heads of agreement has already been signed between Range River and Ariona Company, a specially created vehicle constructed to recapitalise Firestone Energy’s balance sheet with A$40.7m in convertible notes.
The notes would redeem A$20.3m in existing notes which, combined with a bid to buy some of the shares owned in Firestone by the firm’s empowerment partner, Sekoko Resources, would present Ariona with a 25.7% in Firestone Energy.
Ariona also undertook to invest directly in the Waterberg Joint Venture as well as help arrange $400m in finance needed to build the mine which has an adjusted production target of 10 million tonnes/year (Mtpa) by 2019 of thermal coal for use by Eskom.
In March, Sekoko signed a memorandum of understanding with Eskom on a 30-year supply agreement, in terms of which the Waterberg Joint Venture would commence delivering 2Mtpa to the power utility in 2014.
Were Range River Gold’s bid for Firestone Energy be successful, it would have an effective 70% over the project leaving Sekoko Resources with a 30% stake. Range River Gold would also change its name to Waterberg Coal Company.
Range River is chaired by Brian McMaster who, apart from being a registered liquidator, is also a turnaround specialist of some 20-years standing involving 12 ASX-listed companies, according to a career summary on the website of Caravel Energy, an Australian-listed company of which he is also chairperson.
“Range River and Ariona have assembled a strong local management team and superior strategy that can extract real value from the Waterberg Coal Project in a timely manner,” the company said in a statement to the JSE.
McMaster is also a director of venture capital and advisory firm, Garrison Capital.
