Bendigo, Beaconsfield halted ahead of likely merger BARRY FITZGERALD July 21, 2010 - 12:55PM .Ads by Google Massive Gold Formation A Little Known Mining Company Has Discovered Something Big. New Rpt.
WealthDaily.com/New_Gold_Report
Melbourne-based gold producers Bendigo Mining and BCD Resources have gone in to a trading halt ahead of confirming details on an expected friendly merger, creating a new mid-tier gold producer with mines in Victoria and Tasmania.
The $150 million combination will own the Kangaroo flat gold mine at Bendigo (Bendigo Mining), the Henty mine in Tasmania (Bendigo Mining) and the Beaconsfield mine in Tasmania (BCD).
Combined annual gold production will be about 160,000 ounces. Bendigo Mining is marginally bigger in terms of annual production (90,000 ounces) but at last count, was sitting on cash of $55 million.
Advertisement: Story continues belowThe high-grade Beaconsfield gold mine is best known for the 2006 Anzac Day rockfall that killed one miner and trapped two others for two weeks a kilometre underground.
BCD has been considered a takeover target ever since the company returned the Beaconsfield mine to safe operations after it became manager of the mine following the Anzac day rock fall.
The takeover talk escalated following news that its biggest shareholder, with a 22 per cent stake, Malaysia Smelting Corporation Berhad, was a willing seller so it could focus on its core business of tin mining and smelting.
Its average entry price on to the BCD share register is above 20 a share. So if it sells at BCD's current market price - 10 cents a share before the trading halt it will be taking a big haircut.
The expected merger - by Bendigo Mining taking over BCD - comes as investors wait on more news on a recent high-grade discovery at Beaconsfield, some 133 years after gold was first discovered.
The discovery of the thick and high-grade Western Zone only 130 metres along from the existing mine workings was expected to provide BCD with a short-term production and profit boost.
The Western Zone, was previously estimated as a 155,000-tonne resource grading an impressive 16 grams of gold a tonne - or half an ounce of gold a tonne - for about 80,000 ounces of gold.
That compares with the mine's current reserve grade of 9 g/tonne gold.
BCD Price at posting:
90.0¢ Sentiment: Buy Disclosure: Held
