TORONTO (miningweekly.com) – TSX-listed New Dawn Mining has bought around 89% of Central African Gold (CAG) from the company's three biggest shareholders.

New Dawn also bought the convertible and nonconvertible debt owed by CAG to the sellers, which amounted to some $7,08-million, through deeds of assignment.

New Dawn operates two gold mines in Zimbabwe and has indicated it was looking for more development and producing assets in the country.

CAG has gold-mining assets in Zimbabwe and its shares are quoted on the LSE's Aim market. The company acquired a number of operations and exploration projects in the Southern African nation when it bought an 87,4% stake in Falcon Gold and a 100% interest in Olympus Gold Mines in early 2007.

The acquisition will increase New Dawn's gold resource base and mining capacity in Zimbabwe to support a consolidated annual production rate of 50 000 to 60 000 oz of gold within the next 18 to 24 months, the firm said.

Beyond that, the company will target an increase to 100 000 oz/y of gold in four to five years, with the eventual goal of reaching a consolidated production rate of between 200 000 oz/y and 250 000 oz/y of gold.

“The completion of the acquisition is consistent with New Dawn's stated business objective to become a midtier gold producer and the 'in-country consolidator' of gold mining assets in Zimbabwe,” the firm commented.

To complete the acquisition and deeds of assignment transactions, New Dawn issued a total of 8,87-million shares, plus four-year warrants that, if exercised, would increase its share count by another 2,22-million.

The sellers acquired a 23,3% interest in New Dawn, excluding the warrants.

To meet TSX rules, the firm said it obtained written consents from its three biggest shareholders for the deal. Together, the three own 61,7% of New Dawn's issued and outstanding shares.

New Dawn said it plans to seek representation and control of CAG's board of directors, after which it will launch a strategic review of the firm's assets and operations.

It will look into CAG's short- and long-term working capital requirements to fund the development and operation of the company's assets, and could address funding needs through a combination of internal cash flow and new debt and/or equity.

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