SPX 0.00% 19.0¢ spectrum metals limited

spx~ggn merger terms change.

  1. 2,839 Posts.
    Afternoon all,
    This may be of interest to Spinifex holders as the ratio of to GGN shares to be allotted to SPX holders has changed. Up from 2:1 to 2.4:1.
    Good luck to fellow holders,

    PERTH – Aussie-based gold juniors Gallery Gold [ASX:GGN] and Spinifex Gold [ASX:SPX] have agreed on new merger terms following completion of the bankable feasibility study (BFS) into the proposed US$32 million Mupane gold project in Botswana. The two companies announced today (Monday) that the revised share-swap consideration would see Spinifex shareholders receive 2.4 Gallery shares for every Spinifex share held (instead of the originally mooted two-for-one deal). This would result in a combined gold-focused group (to retain the name Gallery Gold) with its key assets in Botswana and Tanzania and a market capitalisation of about A$95-A$100 million (with just over 361 million shares on issue).Voting by Spinifex shareholders to approve the scheme of arrangement transaction had been put off until the BFS was finalised and its data could be taken into consideration, which led to the incremental change in scrip terms. The Spinifex board has endorsed the amended Gallery offer and the merger is now expected to be ratified in late August.Gallery is now proceeding towards financial closure for the US$32 million Mupane development. Managing director Hamish Bohannan, who this month replaced Keith McKay, confirmed Macquarie Bank and Investec Bank had been given the nod as the preferred debt providers.In addition, negotiations were well advanced with the Botswana Government. “Gallery is now in a position to lodge the Mupane mining licence application this week and has been advised that the government review process should take approximately two months,” he said.Applying a gold price of US$350 per ounce, Mupane has an estimated internal rate of return of 24 percent and an after-tax net present value of A$23.4 million (at a discount rate of 8 percent), while total cash operating costs over the initial five-year mine life are forecast to average US$199/oz. Gallery chairman David Harley, who will continue as chairman of the merged entity, told Mineweb project economics may be improved via lowering of capex (through the procurement of quality secondhand plant and equipment) and an increase in reserves.Gallery is hoping to produce about 100,000 ounces of gold per annum from Mupane, where mineable reserves currently stood at 589,000oz (assuming open pit optimisations at US$320/oz). “Higher gold prices should increase the conversion of the present resource base (983,000oz) to reserves and consequently extend mine life,” it pointed out. Plus drill testing of mineralisation beneath the BFS economic limits of the Tau orebody could ultimately lead to a further boost in resources.Construction is earmarked to commence in the September 2003 quarter and production start-up a year later.“Cashflow from Mupane will provide a solid base for future growth of the new merged entity,” said Harley, who added that it (the merger) would help improve Gallery/Spinifex’s capacity to tackle potential new mine developments in Tanzania and ongoing exploration programs in both Botswana and Tanzania.Spinifex brings to the table three gold projects in the Lake Victoria greenstone belt of Tanzania hosting resources totalling around 1.9 million ounces of gold.Mining investment funds Lion Selection Group [ASX:LSG] and African Lion are Gallery and Spinifex’s major shareholders, and will end up with respective interests of about 32 percent and 17.5 percent in the merged company, while Resolute Mining [ASX:RSG], also an Aussie-based African gold miner and shareholder in both Gallery and Spinifex, will emerge with about 12 percent of Gallery’s expanded issued capital.
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