PERTH (miningweekly.com) – Australian gold miner Northern Star Resources this week launched a competing bid to gain a majority interest in the Central Tanami gold project, in the Northern Territory.
ASX-listed Tanami Gold on Thursday announced that Northern Star had submitted an unsolicited alternative proposal to a joint venture (JV) agreement submitted by fellow-listed Metals X earlier this month.
Northern Star has offered to acquire an initial 25% interest in the project for a A$20-million investment, comprising A$11-million in cash and the issue of more than 4.2-million fully paid ordinary shares.
At this stage, a JV would be formed with Tanami, with Northern Star acting as operator.
The gold miner would earn a further 35% interest in the project by sole funding all expenditure and cash requirements to bring the project back into commercial production, which was likely to be achieved once the Central Tanami process plant had been refurbished and was operated for a 30-day period, or had produced 5 000 oz of gold.
During the sole-funding period, Northern Star would also conduct exploration on the tenement area.
Northern Star would further grant Tanami two put options to sell its remaining interest in the project, the first of which would grant Tanami the right to sell a 15% stake in the project for A$20-million in cash or shares. The second put option would allow Tanami the right to sell 25% of the project for a further A$32-million in cash or shares.
Metals X had offered to acquire a 25% interest in the Central Tanami project for A$11-million in cash and the allotment of four-million fully paid ordinary shares. The company would earn a further 50% interest in the project by sole funding all expenditure and costs required to bring the project back into commercial production.
At the start of commercial production, Metals X and Tanami would operate as a JV, with Metals X acting as manager and operator. Tanami would be granted the option of selling its remaining interest in the Central Tanami project for $32-million in cash or Metals X shares, with the option exercisable at any time up to six months after commercial production is achieved.
Tanami told shareholders on Thursday that the company had carefully considered the terms and conditions of both the Metals X and Northern Star transactions, and had found that the Northern Star transaction offered better returns for shareholders.
The board was still obligated to place the Metals X offer before shareholders at the next shareholders meeting.
The Central Tanami project has been on care and maintenance since 2004, and the last major phase of openpit mining ended in 2005 at the Groundrush deposit, where the pit produced some 610 000 oz of gold.