Gold One takeover deal in home stretch

[] — GOLD One International shareholders who choose to cash in on a takeover offer from a Chinese consortium would bag their returns before Christmas, after the offer on Monday became unconditional.

Gold One said the consortium, led by the Baiyin Nonferrous Group, which in May announced its intention to gain control of the ASX and JSE-listed gold junior, has finally received all the necessary approvals from authorities in China.

Shareholders have been given until December 15 to tender their stakes for A$0.55 (around R4.55) per share. Those who held Gold One shares in January would’ve made a profit of around 90% on their investment, with the shares almost doubling in value, from R2.40 since the beginning of the year.

Parallel to this process, the consortium – known as BCX Gold – would pay A$150m to Gold One in exchange for 375 million new shares at A$0.40 each; a process which would lift its existing stake of 23.89% to in excess of 40%.

BCX is hoping to bag at least 60% of Gold One through a combination of the new shares and the offer to existing shareholders. If not, Gold One would issue additional new shares to the company at $0.53/share in order to reach the bidder’s preferred threshold.

“Most shareholders will not tender (their shares) before the offer becomes unconditional so we expect to see lots more offering their shares from here on,’ Gold One CEO Neal Froneman told Miningmx.

Gold One are, however, encouraging shareholders to exercise their choice by December 7 to avoid a compulsory extension should BCX Gold only achieve a majority threshold in the last 7 days of the offer. According to ASX rules, any company reaching this threshold in the week prior to the closing of an offer has to extend the offer by around another two weeks.

“We look forward to concluding the transaction as soon as possible,’ Froneman said in a statement. “To assist the company in expediting the transaction, so Gold One can receive the subscription proceeds before the end of the year, I encourage those shareholders who plan to tender into the offer to do so on or before 7 December 2011.’

Froneman is also not concerned that Gold One would not achieve its production guidance of 120,000oz for 2011. According to one of the deal’s stipulations, BCX Gold would’ve been offered a “claw back’ comprising a placement of new shares if Gold One was to underperform operationally. Gold One has produced just less than 90,000oz in the first nine months of the year, with its flagship Modder East mine still in ramp-up mode.

“We will definitely reach our target; you can quote me on that,’ Froneman said.


Prior to the announcement of the BCX Gold transaction in May, Gold One acquired Rand Uranium in a R1.47bn deal. Although the group has earmarked a $210m debt facility to pay for the transaction, the A$150m dollars from BCX Gold would finance its capex plans at the mine.

At the time of the transaction, Froneman said Gold One was planning to invest an additional R200m in Rand Uranium’s gold assets during the first 18 months following the acquisition, aiming to knock 20% off underground operating costs.

It has already taken over operational control of Rand Uranium, and is waiting for the necessary approvals from the department of mineral resources, expected to be granted in January.

Froneman said the new management has already made improvements at the mine, and would give an update to shareholders in January.