An emerging Australian gold producer has announced plans to join the ranks alongside some of the country’s most significant players, with an aggressive expansion strategy.
Red 5 Limited, the ASX listed gold producer that recently announced plans to acquire a high-quality asset portfolio in Eastern Goldfields, Australia, has taken one step further as the company acquired two new gold mines.
Earlier this week, the company completed the acquisition of a 100% interest in the operating Darlot Gold Mine (acquired from Gold Fields) and the King of the Hills Gold Project (acquired from Saracen Mineral Holdings), both located in the eastern Goldfields region.
The total acquisition cost, following the completion of a rights issue, will see a cash payment of $6.5 million (net of previous deposit of $0.5 million) and the issue of 130 million Red 5 shares to Gold Fields (via its wholly-owned subsidiary) and a cash payment of $6.5 million (net of previous deposit of $0.5 million) and the issue of 90 million Red 5 shares to Saracen under the acquisition agreements announced to the ASX on 3 August 2017.
A further Deferred Consideration of $5 million (in cash or shares) is payable to Gold Fields 24 months after completion (with Gold Fields able to elect to receive shares 12 months after completion), and $4.5 million (in cash or shares) is payable to Saracen 12 months after completion.
The acquisition represents the “beginning of a new growth chapter for Red 5 as an Australian Gold producer listed on ASX.”
In an announcement, Red 5 Managing Director Mark Williams said:
“The completion of these transactions marks a significant milestone for Red 5, providing the Company with immediate gold production and cash-flow in one of Australia’s most exciting gold provinces, plus an outstanding growth pipeline which starts with an immediate satellite mining opportunity at King of the Hills but also includes numerous near-mine and regional resource development and exploration opportunities.
“I would like to welcome all the members of the Darlot operating team to the Red 5 group. We’re very much looking forward to working with the excellent group of staff and contractors at Darlot to take the operation into its next era of growth and development.
“With the transfer of ownership of both of these assets complete, we intend to hit the ground running, with a very active schedule over the remainder of 2017 and into 2018
Red 5 will also commence an immediate review of historical exploration data for KOTH, which has multiple lodes extending over 1.95km and open at depth, providing numerous exploration drilling targets.
The Darlot Gold Mine has been acquired by Red 5 as a going concern and mining and processing operations will continue through the ownership transition, with all existing staff and contractors to be retained.
The Company expects to appoint an underground mining contractor for KOTH in October 2017, targeting the delivery of first KOTH ore to the Darlot mill in November 2017.