Beadell bags Lion share of Cracow Charlotte Dudley Thursday, 15 May 2008
BEADELL Resources is poised to consolidate its producer status following Lion Selection’s agreement to sell off its 30% interest in the Cracow gold mine in an $A80 million deal.
The Cracow operation in Queensland
Perth-based Beadell, which last month entered a conditional agreement with Newcrest Mining to acquire Newcrest’s 70% interest in the Queensland gold mine, will pick up the remaining Cracow stake in a combined cash and shares transaction.
News of the sale and purchase agreement – which will see Beadell commit $65 million in cash and $15 million in company shares – helped boost Beadell stocks by more than 27% to 35c a share.
Beadell’s conditional agreement with Newcrest over its 70% Cracow stake was worth $200 million.
Lion’s decision to sell will likely put paid to any further speculation of the company divesting its stake in Albidon, which many market tipsters considered necessary if Lion was to fund the full acquisition of the Cracow mine.
Waiving its pre-emptive rights to buy out Newcrest’s Cracow share, the investment fund told the market it considered the sale to Beadell was “in the best interests of Lion shareholders”.
Beadell managing director Peter Bowler told MiningNews.net his company was “very pleased” with the ownership developments at the Cracow gold mine.
“Obviously Lion was very keen on the Cracow asset and I think the reason it came about, we just happened to be a company in the right place at the right time,” said Bowler before suggesting Lion’s move was being used as a defence mechanism against Indophil Resources’ takeover offer for the investment fund.
Lion’s Cracow interest sale is still subject to conditions including project financing from Beadell, the finalisation of the sale of Newcrest’s Cracow stake to Beadell, and shareholder approval from Beadell and Lion investors (or in Lion’s case, a waiver from Indophil, of which it holds a 25.4% interest and is involved in a takeover tussle with Lion and now Xstrata).
The deal is also dependent on Beadell raising up to $235 million to fund the full Cracow acquisition from Lion and Newcrest, of which $15 million will go towards settling the cash component of the Lion consideration.
Should the fundraising prove a challenge for Beadell, Newcrest has again backed its commitment to underwrite any shortfall in Beadell’s equity raising (of either $50 million or 19.9% of issued capital).
Lion said it expects the sale to be completed by the end of July.
Clearly pleased about what the Cracow deal meant for Beadell’s producer credentials, Bowler said gaining full control of the mine would make the company “one of the most profitable producers in Australia at the small end”.
He said Beadell planned to extend the mine life to 2013.
Beadell shares gained 7.5c – a 27.3% increase – to 35c in morning trading, before dropping to 33c. Meanwhile Newcrest stocks rose 87c to $30.73 then slipped to $30.62.
Lion Selection shares were unchanged at $1.655.
LST Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
