Kin Mining NL (ASX:KIN) plans to launch a $13 million entitlement offer to maintain the strong momentum built at the 100%-owned Cardinia Gold Project (CGP) near Leonora in Western Australia.
The rights issue comes after the company rejected a non-binding indicative offer (NBIO) from mid-tier gold miner St Barbara Ltd (ASX:SBM) to acquire 100% of Kin via a Scheme of Arrangement at an implied price of $0.16 per share in SBM shares.
St Barbara NBIO rejected
Kin’s Board of Directors rejected the NBIO as it would not have been approved by the requisite 75% voting majority of Kin’s shareholders.
In order to progress the entitlement offer and to ensure the market is fully informed of all material matters relevant to the value of Kin shares, Kin has disclosed its receipt of the SBM NBIO.
Funds from the rights issue will be used for the next phase of exploration across established and new prospects at CGP, as part of Kin’s exploration-driven strategy to further expand its 1.28-million-ounce inventory and make new discoveries.
Approach has “paid off in spades”
Kin managing director Andrew Munckton said: “We’ve had considerable success converting our improving geological understanding into exploration results, and then converting those results into additional mineral resources.
"At Cardinia Hill, we have successfully added 106,000 ounces of new mineral resources, while the Bruno-Lewis Mineral Resource has been expanded by 20% to 374,000 ounces.
“Our systematic approach to exploration has paid off in spades and given us a much better idea of where and how to target the next phase of drilling – which will be designed both to define new resources and to identify additional discoveries with the potential to deliver a step-change in the value of the project.”
Investors have driven Kin's shares price up by as much as 25.8% to an intraday high of 13.2 cents.
Proposed use of funds
The entitlement offer, which will be available to all eligible shareholders, will be priced based on the recent share trading once details have been settled.
Funds raised will enable Kin to follow up on the new discoveries and targets identified as part of its highly successful drilling campaigns completed during 2020 and 2021.
These include the emerging discoveries at Mt Flora and Iron King, as well as multiple new prospects identified following improvements in the company’s understanding of the geology and potential of the CGP such as the Eagle and Crow prospects.
Maintaining momentum
“The additional funding will allow us to continue to assess the recent discoveries at Cardinia Hill and follow up on new prospects like Mt Flora, Eagle and Crow – in short to maintain the very strong exploration momentum we have built up over the past two years,” Munckton said.
“Other targets across the land package have been identified by recent soil geochemistry and modern geophysical surveys over largely untested areas within the highly mineralised Cardinia area. We expect this work to generate new follow-up programs of work stretching into 2022.”
St Barbara offer
The St Barbara NBIO was subject to a number of conditions, including no leak or public disclosure of the NBIO, due diligence, the unanimous recommendation of the Kin board, the execution of a scheme implementation agreement between SBM and Kin containing exclusivity mechanisms, and no further issuance of equity securities by Kin.
This proposed transaction, if it had been implemented, would amongst other things have required the approval by a majority of shareholders (other than SBM) holding 75% of the shares voting in favour at the scheme meeting.
Kin's board considered the NBIO, engaged with SBM and canvassed the views of major and substantial shareholders other than SBM who collectively hold in excess of 25% of the total shares on issue.
It determined that the proposed NBIO could not progress because the proposed transaction was not acceptable to the major and substantial shareholders other than SBM, and therefore would not have been approved by the requisite 75% voting majority of shareholders.
Interest “welcomed”
Munckton said: “The Kin board welcomed the continued interest from St Barbara noting that the proposed NBIO price suggests that the current Kin share price is significantly undervalued.
"The Kin board remains focused on progressing company activities to maximise the value of the company for all shareholders.”
SBM has notified Kin that it has withdrawn the NBIO.
Euroz Hartleys Limited is acting as financial adviser in relation to the NBIO.
The CGP has a 1.275-million-ounce gold resource defined in both oxide and deeper primary mineralisation with potential to grow this resource with further drilling.