JOHANNESBURG (miningweekly.com) – Project developer Dalradian has gained control of the 2% net smelter royalty on the Curraghinalt gold deposit, which it is developing in Northern Ireland.
Dalradian is acquiring the royalty by buying Aim-listed Minco in a recommended share-for-share transaction, which values Minco at 2.532p a share. Minco president and CEO John Kearney on Thursday described the transaction as an “attractive” valuation for the royalty and a “significant premium” over Minco’s recent market capitalisation.
The transaction value is a premium of about 91.1% to the closing price of Minco on March 20 – the last business day prior to the start of the offer period, and a premium of about 111.1% to Minco’s volume-weighted average share price over the 30-day trading period to March 20.
As part of the scheme, Minco will demerge its wholly owned subsidiary Buchans Resources to Minco shareholders, so that on the completion of the Dalradian offer, the only asset held by Minco will be the royalty.
“The structure of the offer allows Minco shareholders to realise the value of the royalty, with the opportunity to participate directly in the Curraghinalt gold project as Dalradian continues the exploration and development of the deposit, which in the view of the Minco board, has not heretofore been reflected in Minco's share price. In addition, by receiving the Buchans shares pursuant to the demerger, Minco shareholders will also retain their interest in all of Minco's existing assets, other than the royalty," Kearney explained.
Buchans is a Canadian registered company, which holds directly or indirectly all of the assets of Minco other than the royalty. Its primary assets are located in Canada, the UK and Ireland. It also indirectly holds about a 26% shareholding in TSX-V-listed Xtierra, which holds mineral properties in Mexico.
Dalradian president and CEO Patrick Anderson hailed the agreement with Minco as a “great win” for his company’s shareholders.
Dalradian is in the process of completing an environmental and social impact assessment in support of a planning application to build a mine at the Curraghinalt deposit. It plans to submit this assessment later this year.
A 2016 feasibility study for Curraghinalt calculated an after-tax net present value (NPV), at a 5% discount rate, of $301-million, and an internal rate of return (IRR) of 24.4% at an assumed gold price of $1 250/oz.
The feasibility study is based on proven and probable reserves of 1.44-million ounces of gold and 660 000 oz of silver.
Over the initial ten-and-a-half years life-of-mine (LoM), Dalradian expects to produce 1.36-million ounces of gold and 380 000 oz silver, using an average overall gold recovery of 94.3%. The operation will produce gold at a rate of 130 000 oz/y in the first ten years, with an average LoM total cash cost of $556/oz and a LoM all-in sustaining cash cost of $674/oz.