LionGold builds war chest for acquisitions

LIONGOLD Corp has launched a combined $US202 million ($A219 million) share and warrant placement, with funds to help underpin the expansion of its gold business through acquisition plays.
LionGold builds war chest for acquisitions LionGold builds war chest for acquisitions LionGold builds war chest for acquisitions LionGold builds war chest for acquisitions LionGold builds war chest for acquisitions

The Singapore-listed company is proposing a private placement of up to 180 million ordinary shares at $1.10 each, representing a 10% discount to the company's volume-weighted average traded price of $1.23 on August 13.

In addition, 135 million warrants will be issued at 2c each, convertible into ordinary LionGold shares at a conversion price of $1.35.

The company could potentially raise $202 million in a full take-up of placement shares and warrants.

LionGold said the issuance and subscription of the new shares and warrants would be carried out via three tranches, with an extraordinary meeting to be convened to obtain shareholder approval.

Platinum Partner's PPLO fund, Carnegie Hall Group, and Spring Road Advisors will equally take up the placement.

LionGold will use a majority of the funds to assist its acquisition plans, while the balance will be used to progress existing gold mining projects as well as for general working capital.

The company wants to hold 10 million ounces in resources, 2Moz of reserves and lift production to 200,000oz per annum by the end of 2014.

"The $200 million we have proposed raising will provide LionGold with a war chest to take advantage of the immediate, extraordinary opportunities we have identified among gold global miners," LionGold chief executive and managing director Nicholas Ng said.

"The investments we make today could ultimately position the group as a leader in the industry, once the up-cycle in gold resumes."

LionGold, which has acquired interests in seven gold companies since March 2012, is well placed to make good on its acquisition strategies as it takes advantage of the volatile gold price.

This has led to an even greater fall in the value of many junior miners globally, and according to LionGold, has increased prospects for purchasing producing and near-production gold mining companies at discounted prices.

Meanwhile, LionGold expects an additional $174 million to be raised over the next three years if the entire warrant issue is subscribed to and converted.

This would be in addition to the $309 million that could be raised on full conversion of the existing 2015 warrants, at an exercise price of $1.17.

Last month, LionGold made a $9.1 million takeover bid for Canadian-listed Acadian Mining Corporation, which has gold projects in Nova Scotia.

It came after LionGold purchased an initial 9% of Acadian at C9c per share in March as part of an expansion into North America.

Following completion of the takeover, the company's gold inventory would increase to 6.8Moz, comprising 900,000oz in reserves.

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