Metals One has outlined progress in its push to build a vertically integrated gold business in South Africa through Lions Bay Resources (LBR), the joint venture vehicle it shares with TSX-V-listed Lions Bay Capital and the Salamander Mining management team.
The company has advanced the full US$1.8m in convertible loan notes to LBR, which it intends to convert into a 30% stake once LBR completes its acquisition of a cogeneration plant in Newcastle, KwaZulu-Natal.
The plant, independently valued at US$39.6m on a replacement basis, is expected to be settled imminently for just US$1.36m and would require roughly US$4.5m to restart steam and power production.
Crucially, the plant may also be reconfigured to include a gold concentrate roasting complex. Such a move could help reduce shipping concentrate to Asian smelters, which has a big impact on South African producers’ margins.
On the mining side, LBR has agreed a plan in principle with the Business Rescue Practitioner overseeing Vantage Goldfields, which has sat in business rescue since the Lily mine crown pillar collapse in 2016.
Vantage holds mining leases across the Barberton greenstone belt, which includes a historical resource inventory of 4.5 million ounces of gold, a central metallurgical complex, and extensive underground workings.
“With our key partners, the Company’s vertically integrated South African gold business development strategy is now being implemented. LBR has secured the cogeneration plant in Newcastle which could play a key role in unlocking value in our targeted mining assets, including Vantage, as a source of cheap power initially, and as a gold roaster in the longer term,” said Daniel Maling, Managing Director of Metals One.
“Thanks to the tireless efforts of the team at LBR, we now have a plan agreed to acquire the Vantage assets through the Business Rescue process.
“We believe these assets will be potentially transformational for LBR, and to Metals One as a 30% owner, and look forward to providing further updates as the Plant acquisition and Vantage plan progress.
“Metal One’s significant cash and liquid investments held on its balance sheet have enabled it to position itself, and LBR, as front runners in the Vantage Business Rescue process.
“LBR is now in the position of considering several offers for project level financing for the balance of cash required to complete the Vantage asset acquisition and mine startup capital.”