Photo by: Bloombeg
KALGOORLIE (miningweekly.com) – Diversified metals miner Metals X told the last day of the Diggers & Dealers conference that while it would continue with its acquisition strategy, the company would not become involved in a bidding war for an asset.
CEO and executive director Peter Cook pointed out on Wednesday that, in the last month alone, the company had finalised the acquisition of three gold projects, including the Georges Reward project for A$4.5-million, the Grosvenor gold project for 18-million shares and the Mt Henry gold project for 22-million shares.
The Mount Henry operation would be commissioned as a bolt-on operation to the currently operating Higginsville mine, Cook said, and could add some ten years to the Higginsville project's mine life.
The Grosvenor project was expected to go into production by late 2016.
“While everyone is focused on buying big assets off the majors and raising a lot of money to do this, Metals X has bought huge volumes of gold and four processing plants without having to go to the market or overpaying for the assets,” Cook said.
He pointed out that all of the assets were acquired outside of a competitive tendering process, with Cook saying that Metals X "rarely" competed with other miners for assets.
This strategy was tested earlier this year as Metals X made a play to acquire a 25% interest in the Central Tanami gold project from owner Tanami Gold, for A$11-million in cash and the allotment of four-million fully paid ordinary shares.
Metals X had also offered to earn a further 50% interest in the project by sole funding all expenditure and costs required to bring the project back into commercial production.
Despite signing a binding agreement with Metals X, Tanami Gold also contemplated a similar agreement with ASX-listed gold miner Northern Star, which launched a competing bid.
Northern Star offered to buy a majority interest in the gold project, offering to acquire an initial 25% interest in the project for A$20-million, comprising A$11-million in cash and more than 4.2-million fully paid ordinary shares.
Metals X responded by appointing solicitors to defend its claim on the Central Tanami project. Speaking on the sidelines of the conference, Cook said the process was still ongoing.
“We signed a binding agreement to buy that project from Tanami and the board of that company signed another binding agreement after ours, on the basis that ours failed. Did ours fail because the shareholders voted for another [offer]? Not necessarily.”
Cook noted that, while Metals X was "aggrieved" by the development at Central Tanami, the company had no "beef" with Northern Star itself, as the company likely identified what a significant acquisition opportunity the Central Tanami project was.
As for the final outcome of the Central Tanami issue, Cook said that “daylight would be the disinfectant for the issue".