TANAMI SECURES KEY COYOTE ACQUISITION
BANKABLE FEASIBILITY STUDY TO IMMEDIATELY FOLLOW LANDMARK DEAL
Tanami Gold NL (ASX: TAM) has taken a decisive step towards its objective of becoming a significant gold producer in the Tanami-Arunta region of northern Australia after being announced today as the successful bidder for AngloGold Australia Limited’s high-quality 412,000-ounce Coyote gold deposit in the Western Tanami.
The acquisition – for a total consideration of A$14 million in a combination of cash and shares, plus a
gold royalty on future production – will increase Tanami Gold’s total resource inventory in the Western
Tanami to 572,000 ounces including its existing Larranganni resources, 35 kilometres north of Coyote.
The Perth-based Company said today (Monday) it would immediately commence a bankable feasibility
study leading to development of the Coyote Project, including an aggressive exploration program to
further increase the Coyote resources and test a large number of regional targets.
“We are strongly of the view that there is significant potential to add to the Coyote resource given the
presence of high-grade intersections, particularly at depth,” said Tanami’s Managing Director, Mr Denis
Waddell. “The acquisition also includes Anglo’s high-quality Western Tanami exploration portfolio, where ore grade intersections have been achieved at numerous prospects outside of the main Coyote resource.”
“This is a most significant acquisition for Tanami and represents the key turning point for the Company
in our quest to establish a significant gold operation in the world-class Tanami-Arunta Province of northern Australia,” he added. “We are delighted to have secured this outstanding opportunity following a
highly competitive bidding process.”
Tanami has successfully attracted some of the world’s largest gold companies to fund exploration on its
large ground position in the Tanami-Arunta Province, with exploration joint ventures in place with Barrick Gold, Newmont and Troy Resources.
In addition, Tanami is developing a potential new cash flow opportunity in base metals through its 18.3% interest in ASX-listed Pilbara Mines Limited, which owns 100% of the high-grade Jaguar polymetallic deposit near Leonora in Western Australia (1.7 million tonnes at 11.9% zinc and 3.66% copper).
Mr Waddell said the Coyote acquisition represented an outstanding opportunity to realise strong synergies by combining Anglo’s Western Tanami Project with Tanami’s existing Kookaburra and Sandpiper resources (totalling 160,000 ounces) at Larranganni.
“The combined Coyote and Larranganni resources provide a strong base for us to commence gold
production in the Tanami,” he said. “The cash flow from this operation will enable us to further explore
depth extensions to the identified resources, continue regional exploration and contribute to our major
regional joint ventures with Barrick and Newmont.”
“We are particularly pleased that AngloGold has demonstrated strong support for the acquisition by
electing to take part of the consideration in Tanami Gold shares rather than cash,” Mr Waddell added.
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“We believe this represents a strong vote of confidence in the quality of the combined project and tenement package and Tanami’s ability to maximise its value in the short term.”
On settlement of the acquisition, AngloGold will become Tanami Gold’s largest shareholder with 11.6% of the Company’s issued capital, alongside an already strong share register featuring a number of major European and Australian institutions.
The acquisition includes the Coyote resource (2.4 million tonnes grading 5.4 g/t gold for 412,000
contained ounces – estimated by Tanami Gold) and AngloGold’s Western Tanami tenement package
comprising a number of exploration licences and applications together with an established exploration
camp and associated equipment.
The consideration comprises a non-refundable A$250,000 deposit, a A$3.75 million cash payment
payable on completion of the transaction (scheduled by 16 January 2004), the issue to AngloGold of 25
million Tanami shares at an issue price of 20 cents on completion, and a A$5 million payment within 120
days of completion.
In addition, a gold royalty is payable based on a sliding scale for different levels of future gold production
and capped at 1 million ounces of produced gold.
AngloGold will voluntarily escrow its Tanami Gold shares for a minimum 12-month period following settlement in January 2004.
Mr Waddell said that, following a recently completed A$3.5 million placement, Tanami had received
strong indications of support for such an acquisition from all major shareholders and potential financiers.
“We would anticipate being able to arrange suitable funding relatively quickly both to meet the deferred
A$5 million payment to AngloGold and cover the costs of a bankable feasibility study and major
exploration program at Coyote,” he said.
“The next 12 months will be a time of significant transition for Tanami Gold as we move ahead to
develop two potential production centres – gold in the Western Tanami and base metals in Western Australia through our strategic interest in Pilbara Mines.”
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