JOHANNESBURG (miningweekly.com) – JSE-listed Village Main is to acquire 74% of the Consolidated Murchison antimony and gold mine at a time of strong prices for both metals.
"The record high antimony and gold prices have more than offset the effect of the strong rand," Village CEO Bernard Swanepoel commented.
Antimony, used mostly for flame retardants, has a variety of commercial applications in plastic, fabric and electronic printed circuit boards.
Village will pay R30-million to Swanepoel's To The Point Growth Specialists (TTP) for the mine, which TTP acquired earlier this year from JSE-listed Metorex.
Cons Murch was returned to profitability under TTP's cost reduction process, implemented over the last year, including during a period when Metorex still owned the operation.
A black empowered employee trust owns the remaining 26% of Cons Murch.
Village will pay TTP an additional R10-million for the right to manage Cons Murch, and receive R605 000 a month as a management fee, which will result in Village becoming cash generative.
The mine has a compliant resource of 750 272 oz of gold at an average grade of 2,45 g/t - including 8 970 oz in the measured category - and 200 729 t of antimony at an average grade of 2,10%, which amounts to a 1,3 million ounce equivalent gold deposit.
Cons Murch, located near Gravelotte in Limpopo province, produces antimony and gold from its three operating shafts of Athens, Monarch and Beta.
Most of Cons Murch's antimony is marketed by global metals marketing company, Traxis, the antimony price starting the year at around $2,66/lb and and rising to $3,04/lb before dipping.
Village will also raise and advance R20-million to Cons Murch for further mine expansion after Metorex's recent capitalising of the asset.
"The R20-million injection will also self fund all of the mines' future working capital requirements," Swanepoel added.
The total R40-million for the acquisition will be payable partly or wholly in cash or through the issue to TTP of up to 18 million ordinary Village shares at a value of 220 c each.
The issue price represents a premium of 8,9% to a Village share price of R2,02 and a 2,5% discount to the 30-day volume weighted average traded price of R2,26 for Village shares on October 6.
Independent competent person Minxcon has valued Cons Murch at between R200-million and R400-million – compared with the purchase of 74% of the company for R30-million - and further value-adding potential, Village said, might arise from the treatment of the high-grade gold tailings dam, probable improved antimony beneficiation and the results of the exploration of the adjacent properties.
The transaction is in line with our stated strategy of acquiring a cash generative asset.
Village has obtained irrevocable support from its two largest shareholders who together carry 72,7% of the shareholder vote.
Cons Murch is currently one of the largest known antimony orebodies, its underground mining operation being in the antimony line of the Archaean Murchison greenstone belt.