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- Aurelia Metals (AMI) entered a trading halt this morning but has already released the details of an acquisition and capital raise
- Aurelia will acquire the Dargues Gold Mine and regional tenements from Diversified Minerals for up to $205 million
- The price includes a $176 million cash payment, $24 million in shares and a contingent payment of up to $5 million
- The mine recently began gold production and is expected to produce an average of 45,000 to 55,000 ounces of gold per annum over the next five years
- This buy is a strategic move which forms part of Aurelia’s goal to become a mid-cap gold producer
- To fund the acquisition, Aurelia will raise up to $130 million through a placement and entitlement offer
- It will also draw $45 million under a new debt facility and source the remaining funds from its $105 million cash balance, valid as of September 30
- Aurelia Metals is yet to come out of its trading halt, with shares last trading for 50.5 cents on Thursday, November 12
This morning, Aurelia Metals (AMI) entered a trading halt regarding a capital raise and acquisition, the details of which have now been released.
The acquisition
Aurelia Metals will acquire the Dargues Gold Mine and regional exploration tenements in New South Wales. The assets will be bought through the acquisition of all shares in Dargues Gold Mine from Diversified Minerals.
Dargues is located in southeastern NSW and comprises an underground mine and processing plant that produces a clean gold concentrate.
It delivered its first shipment of gold concentrate in June this year and, in September, the process plant reached a 30,000 tonnes-per-month capacity.
On average, Dargues is expected to produce between 45,000 and 55,000 ounces of gold per annum at an average all-in-sustaining-cost between $1150 and $1350 over the next five years.
Aurelia considers this acquisition to be strategic in achieving its goal of becoming a mid-cap gold producer.
Notably, the Dargues Gold Mine complements Aurelia’s existing Hera and Peak mines in NSW, brings Aurelia in line with ASX-listed mid-cap gold peers, provides significant upside potential and improves its asset portfolio.
“The acquisition of Dargues is a landmark transaction for Aurelia. The acquisition diversifies our production base while also increasing Aurelia’s overall production weighting further towards gold,” Managing Director and CEO Dan Clifford said.
Acquisition price
Aurelia will pay Diversified Minerals up to $205 million. This will consist of $176 million in cash and $24 million in shares at 43 cents cents per share. This scrip payment will be subject to escrow until at least until Aurelia releases its end of financial year reports.
Once the equity raise and scrip payment have been completed, Diversified Minerals will own about 4.5 per cent of Aurelia.
Additionally, Aurelia will make a contingent payment of $5 million in shares based on the addition of JORC mineral resources discovered at Dargues up to June 30 2022.
Funding
To fund the acquisition, Aurelia plans to raise $130 million. This equity raise will be split into a $41 million institutional placement and an $89 million one-for-4.2 accelerated pro-rata non-renounceable entitlement offer. The entitlement offer is split into an institutional and retail component.
359 million shares will be issued under the equity raise and scrip payment, which equates to around 41 per cent of Aurelia’s total shares outstanding once the equity raise and scrip payment have been completed.
The shares will be issued at 43 cents, which represents a 14.9 per cent discount to the last traded price of 50.5 cents on November 12.
Up to 95 million new shares are expected to be issued to new and existing institutional shareholders under the placement.
The placement and institutional entitlement offer component will close today and settle on November 24. The new shares will then be allocated and commence normal trading on the following day.
Meanwhile, the retail entitlement offer will open on November 20 and close on December 3. On December 10, new shares under the retail offer will be issued and commence normal trading on the following day.
Additionally, Investec and BNP Paribas will provided a secured term loan facility of $65 million, which will be drawn to $45 million to fund the acquisition.
Further, Aurelia’s existing syndicated working capital facility and environmental bonding facility will be replaced with a new $20 million working capital facility and a $50 million environmental bonding facility, drawn to $46 million. These will both be provided by Investec and BNP Paribas.
Lastly, Aurelia will use some of the cash it had at the end of September, with reserves at the time totalling $105 million.
Once the acquisition is complete, Aurelia says it will maintain a strong balance sheet. It expects to have $76 million in remaining cash on hand and total drawn debt of $45 million.
Aurelia Metals is yet to come out of its trading halt, with shares last trading for 50.5 cents on Thursday, November 12.
