Red Mountain Mining Ltd's (ASX:RMX) strategic funding partner for the Batangas Gold Project in the Philippines, Bluebird Merchant Ventures Ltd, is preparing to list on the London Stock Exchange (LSE) main market
The benefit for Red Mountain on the Bluebird listing, is that it will receive cash, to add to the recently raised A$1.19 million (before costs) from a placement and rights issue.
With Red Mountain's market cap. currently circa $3 million, the company has an enterprise value of just $1 million.
Batangas currently hosts an Indicated and Inferred resource of 6.19 million tonnes at 2.2g/t gold for 444,000 ounces.
Details of the listing and cash to Red Mountain
On Bluebird admission to the LSE, US$1.2 million (A$1.6 million) in loans will be re-paid to Red Mountain within 5 days.
Red Mountain has also subscribed for of GBP 500,000 (US$700,000) in shares in Bluebird, and will hold circa 4.7% of Bluebird’s issued capital following.
Therefore net of the subscription in Bluebird, Red Mountain will receive US$0.6 million (A$0.8 million) in cash, including repayment of the Bluebird Loans with interest and costs and 25% joint venture contributions.
Jon Dugdale, managing director for Red Mountain, commented:
“The success of Bluebird’s Placing and Admission to trading on the LSE, will be a major milestone for both Red Mountain and Bluebird, and represents a strong vote of confidence in the planned, high grade, Batangas Gold Project development.
“This releases the shackles on the project, and will allow the new JV to get on with completing the DFS; a geotechnical and resource target drilling program, and permitting of the Batangas Gold Project development.”
Analysis
The Stage 1 funding payments by Bluebird for 25% of Red Mountain Mining Singapore Pte (RMMS) total US$1.7 million.
RMMS is the holder of the Batangas Gold Project assets.
This represents a US$6.8 million (A$9 million) valuation for 100% of Batangas.
With Red Mountain holding 75%, and having an enterprise value circa $1 million, the company provides an intriguing investment opportunity in the gold sector.
The Stage 1 funding use:
The Stage 1 funding will allow the joint venture to complete a Definitive Feasibility Study on the project.
The initial results confirm low capital and operating costs and recovery of over 100,000 ounces of gold during the initial 5 to 6 years of a 10 year production plan.
Final permitting is progressing through the Philippines Government approval process.
Red Mountain has also outlined it is also on the lookout for other advanced gold development and exploration opportunities, with a particular focus on Australia.
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