Xingye’s technical expertise in bringing greenfields exploration projects through to production will be used to assist Far East Gold. Pic: Getty Images.
FEG’s Indonesian treasures reel in $14m investment at a 21pc premium from Chinese miner
Mining
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- Far East Gold signs conditional agreement for up to >$14m investment from Chinese silver miner at a 21% premium to its last traded price
- Xingye Silver & Tin Mining to subscribe for more than 71.2 million shares priced at 20c, giving it a 19.99% strategic stake in the company
- The largest silver mine in China will lend its technical expertise in bringing greenfields exploration projects through to production
Special Report: Far East Gold’s portfolio of highly prospective assets in Indonesia has proven irresistible to the Hsing Yip Gold (Hong Kong) Mine Company, which is taking a 19.99% strategic stake in the company at a 21% premium.
Hsing Yip is a wholly-owned subsidiary of Shenzen-listed Chinese miner Inner Mongolia Xingye Silver & Tin Mining Co. (Xingye), the largest silver producer in China with a market capitalisation of over $4bn. It is looking to subscribe for more than 71.2 million shares in the company at 20c to raise over $14m.
This is a strong sign of the value that Xingye ascribes to Far East Gold (ASX:FEG) as the investment is priced at a 21% premium to its last traded price and 47% higher than the recent $4m capital raising priced at 13.6c per share.
The combination of the investment and capital raising will allow the company to accelerate exploration and development of its projects including the advanced Idenburg copper-gold project in Indonesia’s Papua province that FEG is in the process of acquiring.
Xingye also brings its considerable depth of technical expertise in bringing greenfields exploration projects through to production – along with the capacity for follow-on investment – to the table as a major shareholder.
“This transaction marks the logical next step for FEG, following recent announcements around the pending Idenburg acquisition, which triggered several approaches from strategic investors,” chief executive officer Shane Menere said.
“We are delighted to welcome Xingye as a strategic partner because it ticks all our boxes – significant funding, deep technical expertise and full alignment with our strategic goals for our portfolio of high-quality assets.”
Xingye chief executive officer Shucheng Zhang said the company’s portfolio represented a “perfect fit for Xingye’s competencies around bringing highest-quality greenfield projects all the way through to production”.
“We are looking forward to working closely with the Far East Gold team to achieve this,” he added.
Xingye and the strategic investment
Xingye is focused on non-ferrous metal mining and smelting, operating a full mining industry chain from geological exploration, mining, mineral processing to smelting of silver and tin.
It has also been actively exploring for copper and gold in Russia, Kyrgyzstan, Laos, Indonesia and Africa for the past five years.
As of December 2023, Xingye had confirmed resources of more than 800Moz silver and 300,000t.
Its investment in FEG will be made in three tranches with the first $6.3m tranche, which falls under the company’s existing placement capacity, expected to take Xingye’s stake to ~9.99%.
The second tranche is sized to exhaust the company’s current placement capacity while the final tranche is subject to shareholder approval.
All tranches are also subject to Xingye obtaining various Chinese regulatory approvals while the second and third tranches also required approval for Australia’s Foreign Investment Review Board.
On completion of the second tranche, Xingye will also have the right to appoint a director to FEG’s board.
Indonesian projects
FEG had in July signed a binding agreement with PT Iriana Mutiara Idenburg for exclusive rights to explore, develop, and operate the Idenburg gold project in Papua.
Idenburg covers 952.8km2 and is known for high-grade lode gold occurrences characteristic of orogenic gold systems – similar to areas such as the 60Moz-plus Kalgoorlie Goldfields and the Mother Lode district of California.
This is supported by being located in a region that, when combined with Papua New Guinea, hosts several multi-million-ounce gold and copper deposits including the world class Grasberg (>70Moz gold), Porgera (>7Moz gold), Frieda River (20Moz gold) and Ok Tedi (20Moz gold) projects.
Idenburg itself had attracted majors such as Barrick, Newmont, Newcrest and Placer Dome to at least carry out early investigations.
The project is currently the subject of work by to define a maiden JORC 2012 resource.
Other projects in the company’s portfolio include Woyla, Trenggalek and Wonogiri.
FEG expects to soon resume resource drilling at Woyla in Aceh province to follow up on one of the project’s best cumulative gold intercepts to date of 20m at 7.57g/t gold and 8.5g/t silver.
It is also evaluating priority areas for a planned scout drilling program at Trenggalek in East Java.
This article was developed in collaboration with Far East Gold, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
