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Red Back flags possiblity of future merger

  1. jkim1078

    249 Posts.

    WRAP - Red Back flags possiblity of future merger

    By Byron Kaye
    SYDNEY, July 10 AAP - Red Back Mining NL today flagged the
    possibility of a future merger with five per cent stakeholder
    Resolute Mining Ltd's African interests to form a larger gold
    producer.
    Red Back managing director Ross Ashton also said today the
    explorer hoped to overcome local disinterest in African investments
    by pursuing an offshore listing.
    Resolute has an 11.4 per cent stake in Botswana-based Gallery
    Gold Ltd and a nine per cent holding in Tanzania-based Spinifex
    Gold Ltd.
    Red Back's main operation is the Chirano gold project in Ghana,
    where it recently undertook a bankable feasibility study due for
    completion in October.
    "There's a possibility that all these three companies ... will
    form a 3-500,000 ounce (per year) producer in two or three years
    time, and at least that overcomes some of the disinterest on the
    ASX," Mr Ashton told a resources seminar today.
    He said current production estimates for Chirano, of about
    140,000 ounces over a 7.5 year life, were doing little to overcome
    Australia's reluctance to invest in Africa.
    "Australian investors are a little bit cautious about deepest,
    darkest Africa and we've got to be aware of that, in terms of our
    corporate opportunity," he said.
    "There's a problem being in Africa and being on the ASX."
    Mr Ashton said Red Back hoped to ultimately end its reliance on
    the Australian market and explore offshore listing opportunities,
    such as London's Alternative Investment Market (AIM).
    "Certainly Europeans ... from strong colonial history are not so
    afraid of Africa," he said.
    "Red Back's been moving in this direction in her own right for
    some time."
    He added that about 12 per cent of the company was currently
    held by European institutions.
    Australia's Macquarie Bank Ltd has a 20 per cent stake.
    Mr Ashton said the offshore listing was likely to be in a merger
    with another mining interest, although he did not say whether that
    would be Resolute.
    "If we are stuck on the ASX at 140,000 ounces, it's probably not
    the best thing for our shareholders and we'd probably move to get
    out," he said.
    "The preference, though, is to form a relationship with a mining
    company and get the company bigger and eventually move the company
    offshore.
    "We put Resolute on the register because we believe if you're
    going to be stuck on the ASX you might as well get bigger.
    "There is no intention at this stage to merge - it's just an
    opportunity to consider."
    Red Back shares were one cent higher at 40.5 cents and Resolute
    shares were four cents higher at 85 cents.
    AAP bk/sh

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