Ground Breakers: Chinese-backed gold miner plans restart, BHP approves unification
A mine emblematic of the collapse of the gold sector in 2013 is poised for its long-awaited revival.
Focus Minerals (ASX:FML) shut its Coolgardie, Laverton and The Mount operations as gold prices nosedived in 2013 amid high operating costs.
It came just months after Shandong Gold, one of China’s largest gold mining companies, tipped a massive $225 million into the company in a placement to take a 49% stake in the business.
Since 2013 the assets have laid dormant as Focus has drawn down on those cash reserves.
But sustained high Aussie gold prices look to have turned the tide, with Focus today announcing it plans to restart mining in 2022 at Coolgardie, 40km west of the Super Pit and a gold hub since 1892.
Shandong will make a US$10 million unsecured loan to Focus to back the revival plan, with Focus also looking to raise $45.69 million in fresh equity through a non-renounceable entitlement offer.
A PFS in 2020 put a $48 million price on restarting the project, including $24 million for the refurbishment of its mothballed Three Mile Hill processing plant.
The mine would deliver 63,000oz of gold a year over an initial 6 year life.
““This is a significant moment for Focus and I thank the Board for its confidence in the work our team has been carrying out to prepare the Coolgardie Gold Project for a resumption of mining activities,” Focus CEO Zhaoya Wang said.
“I also thank all our shareholders for their patience and support of our strategy to be diligent and disciplined in our pursuit of delivering a sustainably profitable gold mining operation.”
“A lot of work remains ahead of us but we are highly confident in the strong mineral endowment our team has identified at Coolgardie, which will underpin a successful return to gold mining operations.”
“I look forward to further updating shareholders on our progress with executing the Company’s plans over the coming months.”
BHP (ASX:BHP) announced plans to collapse its dual structure, a holdover from its Billiton merger in 2021, back in August as it unveiled its annual results.
It is part of a range of measures the miner has planned to transform the company, along with the approval of the massive Jansen potash project and the divestment of its oil and gas and thermal coal assets.
BHP will become a single company registered in Australia but with secondary listings on the UK, South African and US stock exchanges after its board approved the arrangement this week.
It will now go to a shareholder vote. BHP’s Australian shares were up ~2% this morning.
“A unified corporate structure will make BHP simpler and more agile, with the strategic flexibility required to shape our portfolio to deliver value through producing the commodities needed for continued economic growth, improved living standards, electrification and decarbonisation,” BHP CEO Mike Henry said.
RBC Capital Markets analyst Tyler Broda said BHP would be confident of securing the 75% vote it needs for the merger to proceed.
“Should this unification succeed, BHP will no longer be eligible for index inclusion in the UK or Europe. In our view, for UK/European indexed or benchmarked funds, who are unlikely to be able to hold BHP post this transaction, there is little incentive at this point to vote in favour as they will lose a stalwart miner with a strong track record and high dividend payouts from their universe,” he said.
“However, those who hold their BHP Plc shares in a global or non-benchmarked fund, as well as arbitrage funds in the Plc line should have a reasonable uptake on the vote. In Australia, we also think a majority of investors are likely to support.”
It will now proceed to compulsory acquisition after crossing the 90% threshold for its $181 million offer, comprising 34c a share in cash plus scrip to a total value of 63c a pop.
Ramelius saw off a challenge from Gold Road Resources (ASX:GOR), which dumped its 56c all cash bid and sold into the Ramelius offer.
Copper miner 29Metals (ASX:29M) was the leading mid-cap, gaining more than 5%.