LionGold Outlines Operational Plans, Strengthens its Gold Busines.
Highlights
? LionGold has outlined operational plans for its main gold interests, focused on increasing output, reducing production costs and increasing mine life.
? The Board has also taken steps to fortify the Company’s expertise in the gold industry with the appointment of two mining veterans as Directors, the establishment of a Technical Committee and proposal of a share-based incentivisation scheme for select employees and directors.
? This follows initiatives to raise S$73 million through a new share with warrant placement, a rights issue of warrants and the further sale of non-core assets. The 42 million share placement has been fully subscribed, mainly by global institutional investors.
SINGAPORE, 15 October 2012– LionGold Corp Ltd (“LionGold” or the “Company”) has outlined operational plans for its main gold interests in Ghana and Australia, focused on increasing output, reducing production costs and increasing mine life.
In Ghana, the annual budget for Owere Mines, which wholly owns the Konongo Gold Project in Ghana, was recently approved by the Board. As part of the plan, US$2.8 million (S$3.4 million) will be allocated to Owere’s exploration programme over the next 12 months to expand prospects for open pit mining. Investments will also be made in plant and equipment to improve efficiencies at the ore processing facility. Recent gold production at the mine has been steady at around 1,000 ounces per month. The Company acquired a 76% of Signature Metals Ltd, an ASX listed company and which owns 70% of the Owere Mines, in March 2012.
In Australia, Castlemaine Goldfields Ltd has successfully ramped up production at its flagship Ballarat mine, located in Central Victoria. Ballarat is now producing in line with its target of between 40,000 and 55,000 ounces per annum. Gold recoveries are expected to reach over 90% with the implementation of the gold recovery improvement project in 2013. New sources of ore will continue to be identified through underground exploration efforts aimed at extending the current mine life and improving utilisation at the 600,000 tonne per annum gold processing plant. A regional 18 month exploration program to test and advance five other highly prospective tenements in Central Victoria was also recently approved by the Board, to be funded by Ballarat mine cash flow. In August this year, LionGold concluded the acquisition of a 98% stake in Castlemaine after initiating a takeover offer in March. Matthew Gill, Castlemaine’s CEO and Managing Director, has since been appointed as the Company’s Group Chief Operating Officer.
Last week, Castlemaine’s Chairman, Gary Scanlan, was appointed as a non-Executive, Independent Director of LionGold, along with Dr Denis Clarke. Mr Scanlan and Dr Clarke have a wealth of diverse experience in metal exploration and mining and related financial activities. Both will serve on the Company’s Technical Committee, set up to attend to the industry-specific aspects of the gold business. A share incentivisation scheme has also been proposed by the Board to attract expertise at employee and director levels.
LionGold has rapidly established itself in the gold mining industry, having completed the acquisition of three gold exploration and mining companies since March 2012. The Company is consistently looking for acquisition targets which have at least one million ounces in gold resources, are producing or near production and which pass a detailed internal evaluation to ensure these are in keeping with LionGold’s strategic goals and have scope to add value to shareholders.
The recently announced funding initiatives would raise over S$73 million, increasing working capital and bolstering the Company’s capital base. The sum of S$46 million in net proceeds would be generated by the proposed issue of 42 million new shares at S$1.057, inclusive of one detachable warrant for each new share, priced at S$0.065 each. A further S$14.2 million in proceeds would be generated by the issue of warrants, offered at S$0.065 each, with one warrant issued for every four LionGold shares held. Both of these issues are pending SGX approval.
The Company would raise an additional S$12.5 million from the proposed sale of a 60% stake in Industrial Power Technologies Ltd (IPT). The sale of IPT is part of LionGold’s strategy to divest businesses outside of its core gold focus.
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