Ringing the deal bell: Aeris to buy +2.5moz Cracow gold mine
While gold prices have tracked back down their resistance level at $US1,700 ($2465) an ounce as economies begin their recovery, the outlook remains positive.
The precious metal remains a safe haven investment thanks to ongoing economic uncertainty.
Little wonder then there is still substantial acquisition activity in the gold sector with Aeris Resources (ASX:AIS) signing a binding agreement to acquire the Cracow gold mine in Queensland from Evolution Mining (ASX:EVN) for an initial payment of $60m.
Aeris will also have to make a deferred payment of $15m on 30 June 2022 plus a 10 per cent net value royalty from 1 July 2022 to 30 June 2027 that is capped at $50m.
Cracow is an established, high grade underground gold mining operation that has been operating continuously since 2004.
The mine has produced more than 1.4 million ounces of gold to date and is on track to produce between 82,000 to 87,500 ounces of gold in the 2020 financial year, generating net mine cashflow of $84m to $89m.
It had an ore reserve of 610,000 tonnes grading 5.78 grams per tonne (g/t) gold and a mineral resource of 2.55 million tonnes at 4.21g/t gold.
Aeris plans to fund the acquisition through a fully underwritten $40m equity raising and $30m acquisition bridge debt facility.
Evolution says the sale is consistent with its strategy of continuously upgrading the quality of its portfolio and holding six to eight assets with an average mine life of at least ten years.
Meanwhile, Comet Resources (ASX:CRL) is acquiring the high-grade Santa Teresa project in Baja California, Mexico, where drilling has returned some intriguing intersections including 1m at 958.4g/t, or nearly 31 ounces per tonne, gold, 3.9m at 39g/t gold and 1m at 125.9g/t gold.
That the surrounding El Alamo district has produced between 100,000 to 200,000 ounces of gold just provides confidence in the project’s potential.
Comet is paying an initial $25,000 on execution of the heads of agreement and a further $275,000 on signing of an unconditional gold streaming agreement of between $US6m and $US20m with Raptor Capital International to fund development activity at Santa Teresa.
Further payments totalling $4m will also be paid to the vendors on achieving certain milestones.
A number of gold companies have also successfully raised capital with Xantippe Resources (ASX:XTC) raising $1.25m through a over-bid placement while Strategic Energy Resources (ASX:SER) has received firm commitments to raise over $800,000.
Xantippe’s funding will provide flexibility to expand the drilling activities and other exploration activities planned for the Southern Cross project in Western Australia.
Meanwhile, the funds raised by SER will be used for drilling at its Saxby and Billa Kalina projects.