Gold One International (ASX, JSE: GDO) has signed a sale of shares agreement for the acquisition of 100% of gold producer Rand Uranium, which should potentially boost the company's gold production to 300,000 ounces per year.
Gold One will spend US$250 million (ZAR 1.685 billion) in cash to acquire Rand from the Rand Uranium shareholders Pamodzi Uranium, Pamodzi Cooke and Armgold/Harmony Joint Investment Company.
The acquisition of Rand will add annual production of 150,000 gold ounces to Gold One's existing operations at the Modder East mine, plus a huge gold inventory of 13.5 million ounces of resources and 3 million ounces of reserves.
Rand is an established shallow gold operation, one of the few in South Africa, which produced 163,000 ounces of gold in 2010 and fits Gold One’s stated strategy of mining shallow, low technical risk gold resources.
Neal Froneman, Gold One president and CEO, said “I am pleased that we were able to conclude the sale agreement in a timely and efficient manner, allowing us to proceed with this transaction as quickly as possible.
"I remain highly confident that this acquisition will be value-enhancing for Gold One shareholders.”
Gold One’s primary focus is Rand’s gold operations, which principally include the shallow (typically 600 metres to 800 metres below surface) Cooke operations, with the company's immediate focus to enhance the profitability of these existing gold operations.
Gold One will apply its mining experience, techniques and, where appropriate, technologies successfully implemented at Modder East.
Gold One previously said the significant uranium resources hosted within both the underground operations and the surface assets of Rand provide a unique opportunity to consider gold and uranium co-product optimisation when undertaking production planning.
Rand is well advanced with Definitive Feasibility Studies (including 70% of detailed engineering design already completed) on its uranium project.
The project has primarily considered the construction of a uranium processing facility and the surface uranium resources associated with the Cooke Tailings Deposit.
This presents a substantial medium term opportunity for Gold One to reduce operational risk and costs through co-product mining and optimisation.
In addition to the existing gold operations and uranium project, Rand has further tangible upside potential that can be realised in the short to medium term.
This includes additional surface resources, significant historic resources on the old Randfontein Estates Section also held by Rand and increasing the production levels at the currently operating Cooke section.
The sale agreement is subject to the fulfillment or waiver of certain conditions up to 16 months after the date of the agreement.
Conditions include:
- The approval of by the competition authorities of the Republic of South Africa
- That the Sellers and Gold One obtain approval from the South African exchange control authorities
- The passing of such resolutions as may be required by Gold One’s shareholders in general meeting, to the extent required
- All necessary consents being obtained from the Minister of the Department of Mineral Resources in South Africa
- All necessary approvals being obtained from the ASX Limited and the JSE Limited
- Gold One having closed its financing arrangements.
On May 16 Gold One announced that it had invited a consortium of Chinese investors to become a long term strategic partner and major shareholder.
In what could be a company transformational transaction, the consortium will invest at least A$150 million (ZAR1.1 billion) to secure a 60% to 75% stake in Gold One.