Gold One International receives approval for Rand Uranium acquisition

Gold One International (ASX/JSE: GDO) has received approval from the South African Department of Mineral Resources for its proposed US$250 million cash offer for 100% of Rand Uranium (Proprietary) Limited.

This is another plank in the revamped Gold One with the consortium offer to become a major shareholder of Gold One and the acquisition of Rand Uranium.

This South African approval provides Gold One with the change of control of the mineral rights associated with Rand Uranium. Gold One took over daily management of the Cooke underground operations and Randfontein surface operations during September 2011.

Gold One is planning to turn around the Cooke underground operations.

The company is on track to complete the acquisition of Rand Uranium, with the successful raising of $150 million by Gold One either from financing arrangements with Investec Bank Limited (announced on 29 August 2011) or from another debt or equity financing source, a pre-requisite.

The latter would be through a $150 million capital injection into Gold One resulting from a consortium, through BCX Gold Investment Holdings Limited, subscribing for shares in Gold One as part of the transaction announced by Gold One on 16 May 2010.

BCX Gold, made a cash offer of A$ 0.55 per existing Gold One share and a minimum A$ 150 million capital injection into Gold One.

71.28% of Gold One’s shareholders (including bondholders and option-holders) have accepted the Offer to date.

Gold One said it expect the raising of $150 million to be completed in early 2012.

Gold One is generating significant cash flows from the Modder East gold mine operation, a strong cash balance, no debt plus the acquisition of Rand Uranium scheduled to complete in early 2012.

In September, Gold One had cash and equivalents of US$43.2 million.

Its flagship operation is the newly built shallow Modder East mine on the East Rand, some 30 kilometres from Johannesburg, the first new mine to be built in the region in 28 years.

Analysis

Modder East is, unlike most of its gold mine peers in South Africa, one of the shallowest mines extracting gold from 300 metres to 500 metres below surface. It has a Proven and Probable Reserve of 1.53 million ounces at 4.0 g/t gold, with a 13 year mine life.

Gold One has a total resource base of 21 million ounces, including 8.6 million ounces in the Measured and Indicated category.

Modder East has exceeded projected 2011 production targets, producing 113,569 ounces for year to date at a quarterly cash cost of US$478 per ounce, placing it in the lowest quartile of cash producer costs. Gold One has Modder East on track for gold production of over 170,000 ounces in 2013.

With the acquisition of Rand Uranium, Gold One could log gold production from all sources of 300,000 to 350,000 ounces in 2013.

Following completion of the deal, BCX Gold is expected to own 1,259,176,988 shares in Gold One (being 88.98% of Gold One’s issued share capital on an undiluted basis and 87.40% on a fully diluted basis).

Current market capitalisation of Gold One of $460 million looks likely to increase significantly in 2012/2013 as corporate changes and increased gold production filters through to earnings.