M&A Action in Australian Gold


Allied Gold’s Simberi mine in Papua New Guinea has
2 million oz of gold reserves.
(Photo courtesy of Allied Gold)A

The addition of Integra Mining’s Randalls operation,
shown here, through merger is expected to provide
operational synergies between it and Silver Lake
Resources’ adjacent Mount Monger gold project in
Western Australia. (Photo courtesy of Integra Mining)
Three agreed transactions have focused attention on a group of Australian gold producers that have operations primarily, but not exclusively, in Western Australia. St. Barbara Ltd. and Allied Gold have agreed to a transaction whereby St. Barbara will acquire Allied for cash and St. Barbara shares that value Allied at about A$552 million. Silver Lake Resources and Integra Mining have agreed to an all-share acquisition of Integra by Silver Lake that values Integra at about A$426 million. And Zijin Mining, China’s largest gold producer, reported in early August it had acquired a more than 50% interest in Norton Gold Fields, following a May 2012 take-over bid by Zijin that valued Norton at about A$212 million.

St. Barbara/Allied Gold:St. Barbara’s cornerstone asset is its Gwalia under-ground gold mine near Leonora, Western Australia. The company also operates the King of the Hills underground gold mine at Leonora and the Marvel Loch under-ground gold mine 30 km south of Southern Cross, Western Australia.

Allied Gold has two operating gold mines: the Simberi mine on Simberi island, the northern-most island of the Tabar Islands group in New Ireland province, Papua New Guinea, and the Gold Ridge mine on Guadalcanal island in the Solomon Islands.

The combined company expects to produce about 435,000 oz of gold in its 2012-2013 financial year. It will have substantial reserves: 2.5 million oz at its Leonora operations, 2 million oz at Simberi, and 1.1 million oz at Gold Ridge. Exploration opportunities exist near each of these mines, and the com-pany will also have a number of green-fields exploration projects, both in Australia and in the southwest Pacific.

Silver Lake/Integra:Silver Lake and Integra Mining each have a gold mill and mines in the Eastern Goldfields region of Western Australia southeast of Kalgoorlie. Silver Lake also is developing a second mining operation with multiple mines feeding a central processing facil-ity in the Murchison Goldfield 600 km northeast of Perth. This project is under construction, and production is expected to start during the first quarter of 2013.

The proposed transaction will create an Australian gold producer with a 6.6-million-oz gold resource base, inclusive of 1.8 million oz of ore reserves; current production of 200,000 oz/y; and fore-cast production of more than 400,000 oz/y in 2014. Integra shareholders will hold about 40% of the enlarged Silver Lake. The transaction is expected to become effective during the fourth quarter of 2012.

In addition to the benefits flowing from reduced overheads, shared infra-structure, and economies of scale, the enlarged Silver Lake will have two mills with 2.2 million mt/y of milling capacity in the same region, diversifying risk and allowing for optimization of production strategies.

Silver Lake Managing Director Les Davis said, “The strategic and financial logic of the combination is clear, driven by the complementary nature of the two com-panies’ projects and the strong organic growth profile of the combined business.”

Zijin/Norton:Norton Gold Fields and Zijin Mining signed a bid implementation deed in late May 2012 regarding a takeover offer to be made for Norton by Zijin. Zijin already held a 16.98% stake in Norton, and as of early August its inter-est had increased to more than 50%.

Zijin’s August announcement stated, “Zijin is a comparatively young mining company. The successful take-over of Norton Gold Fields will undoubtedly pro-vide an excellent learning platform to Zijin and play a significant role in helping Zijin be more familiar with the interna-tional mining market, better understand leading management systems, and improve Zijin’s level in technology, man-agement, and talent training.”

Norton owns and operates the 3.3-million-mt/y Paddington mill 35 km northeast of Kalgoorlie, Western Australia. The mill produced 152,000 oz of gold in 2011 from feed generated from multiple mines on the Paddington land package.

The mill is based on conventional car-bon-in-pulp technology. The processing line includes a cone crusher, a ball and SAG mill grinding circuit, gravity recov-ery, and cyanide leaching.

Paddington has proven and probable ore reserves totaling 1 million oz in 11 projects on its land package. Measured, indicated, and inferred resources total 5.96 million oz from a list of 28 projects.

As featured in Womp 2012 Vol 09 - www.womp-int.com