Sino Gold launches placement and accelerated pro-rata entitlement offer Gold Fields to increase stake in Sino Gold to 19.9%
TORONTO, May 20 /CNW/ - Sino Gold Mining Limited (ASX: SGX, HKSE: 1862) today announced an equity raising comprising a placement to its major shareholder, Gold Fields Limited and an accelerated renounceable pro-rata entitlement issue to raise a total of up to approximately A$204 million, primarily to fund the close-out of all of the Company's gold forward sales contracts. The proposed raising is comprised of:
<< - a placement at A$5.03 per share (the "Placement") to Sino Gold's major shareholder Gold Fields Limited ("Gold Fields") to raise up to approximately A$68 million which will effectively result in Gold Fields increasing its holding to 19.9% of the issued shares in Sino Gold; and
- a pro-rata entitlement offer at A$4.00 per share (the "Offer") to eligible shareholders to raise approximately A$136 million through a 2 for 15 Accelerated Renounceable Entitlement Offer ("AREO"). Gold Fields have committed to take up all of its entitlements. Shareholders in Canada are not eligible to participate in the AREO.
The Placement and Offer prices represent discounts of 5.5% and 24.8%, respectively, to the closing price of Sino Gold shares on the ASX on Monday, 19 May 2008. The Offer price also represents a 22.6% discount to the theoretical ex-entitlements price. Sino Gold intends to apply the funds raised by the Placement and the Offer as follows:
- close out all of the Company's gold forward sales contracts, which totaled 278,657 ounces at an average delivery price US$525/ounce as at 30 April 2008; and
- Acquisitions, development, exploration expenditure, working capital and general corporate purposes. >>
Commenting on the raisings, Sino Gold CEO Jake Klein said:
"This is an important step for Sino Gold. We are delighted to have received such significant support from our major shareholder, Gold Fields, through its commitment to purchase shares at a premium to the entitlements issue and increase its holding in Sino Gold to 19.9%.
"With the close out of our forward sales, Sino Gold's shareholders will now have the opportunity to fully participate in the value created by our growing gold production in a rising gold price environment."
Hedging Contracts
A requirement of the Jinfeng Project Finance Facility was for the Company to enter into a hedging program in 2005. Sino Gold has not entered into any hedging contracts since 2005. All outstanding gold forward sales contracts are to be closed out at an estimated cost of A$122 million. These contracts are summarised in the table below (Sino Gold's share being 82%).
Following this transaction, Sino Gold has total exposure to rising gold prices. Sino Gold does not anticipate putting in place any further gold hedging.
Placement
Gold Fields, the largest shareholder in Sino Gold, has accepted a Placement totaling up to approximately A$68 million at a maximum price of A$5.03 per share which will effectively result in Gold Fields increasing its holding to 19.9% of Sino Gold's issued shares post the completion of the Offer. In addition, Gold Fields has advised Sino Gold that it will fully take up its entitlements in the Offer. The issue price for the first tranche of the Placement was determined by applying a 4% discount to Sino Gold's Volume Weighted Average Price on the ASX for the 5 trading days ending on 16 May 2008. The issue price for the Placement is at a 25.8% premium to the issue price of the Offer.
The Placement is structured in two parts:
<< 1. Tranche 1 comprises 11,000,000 shares which are to be settled on Thursday, 22 May 2008; and
2. Tranche 2 will comprise the requisite number of shares which will result in Gold Fields holding 19.9% of the issued shares immediately following settlement of the Retail Offer. Settlement of the Tranche 2 will occur on the same date as settlement of the Retail Offer, anticipated to be Wednesday, 25 June 2008. >>
Immediately prior to settlement of the first tranche of the Placement, Gold Fields holds approximately 15.5% of the issued shares in Sino Gold. Immediately following settlement of the second tranche of the Placement, Gold Fields will hold 19.9% of the issued shares in Sino Gold. The final number of shares to be issued pursuant to the Placement, and the final proceeds raised from the Placement, will be announced to the ASX and the HKSE on the date of announcement of the results of the Retail Offer (expected to be Friday, 20 June 2008).
Pro-rata Entitlement Offer
The Institutional Offer and the Hong Kong component of the Retail Offer are fully underwritten by Goldman Sachs JBWere Pty Ltd ("the Lead Manager"). Up to approximately 34 million shares are to be issued in the Offer.
The Offer price of A$4.00 (HK$29.80) per share represents:
<< - a discount of 24.8% (24.3%) to the most recent closing price of A$5.32 (HK$39.35) per share; and
- a discount of 22.6% (22.1%) to the theoretical ex-entitlements price of A$5.16 (HK$38.23) per share. >>
The Offer is comprised of an Institutional Offer and a Retail offer as detailed below. Entitlements under either the Institutional Offer or the Retail Offer cannot be traded on ASX, HKSE or any other exchange, or privately transferred.
1. Institutional Offer
The Institutional Offer is expected to raise approximately A$102 million, 75% of the total Offer. During the Institutional Offer period, eligible institutional shareholders will be invited to participate in the Institutional Offer. Eligible institutional shareholders can choose to take up their entitlement in whole, in part or not at all. A number of shares equivalent to those which would have been issued on exercise of the entitlements not taken up by those eligible institutional shareholders and those which would have been issued to institutional shareholders who are ineligible to participate in the Institutional Offer, will then be offered for subscription to selected institutional investors through a bookbuild process, to be undertaken on Thursday, 22 May, 2008 and Friday, 23 May, 2008 (the Institutional Bookbuild). The Joint Lead Managers have the right to close the Institutional Bookbuild earlier. Any positive difference between the Institutional Bookbuild price and the Offer price of the shares will be paid to the institutional shareholders who did not take up all or any of their entitlement or who were ineligible to participate in the Institutional Offer.
2. Retail Offer
The Retail Offer is expected to raise up to approximately A$34 million, 25% of the total Offer. Existing eligible retail shareholders in Australia, New Zealand and Hong Kong will be invited to participate in the Retail Offer on the same terms as the Institutional Offer. Eligible retail shareholders may choose to take up their entitlement in whole, in part or not at all. A number of shares equivalent to those which would have been issued on the exercise of the entitlements not taken up by eligible retail shareholders and those which would have been issued to retail shareholders who are ineligible to participate in the Retail Offer, will be offered for subscription to selected institutional investors through a bookbuild process commencing on or around Thursday, 19 June, 2008 (the Retail Bookbuild). Retail shareholders who do not take up all or any of their entitlement or who are ineligible to participate in the Retail Offer will receive any positive difference between the Retail Bookbuild Price and the Offer price for the shares. Full details of the Retail Offer will be set out in a prospectus which is expected to be lodged with ASIC and registered with the Registrar of Companies in Hong Kong on Monday, 26 May, 2008 (the "Prospectus"). Any eligible retail shareholder who wishes to acquire shares under the Retail Offer will need to complete the personalised entitlement and acceptance form that will accompany the Prospectus.
The Alliance
In November 2006, Gold Fields and Sino Gold announced the formation of a strategic alliance to explore and develop large scale gold deposits in China, combining the 'in-country' exploration and commercial skills of Sino Gold with the large scale mine development skills of Gold Fields. Following a thorough review of 58 mineral belts in China, four belts have been identified as priority belts with the potential to host these styles of deposits. Work is ongoing in each of these belts. Outside a 50km buffer around Sino Gold's existing operations (White Mountain, Jinfeng, Eastern Dragon and Beyinhar), the parties have agreed to decrease the threshold for new investments to include gold deposits with resources hosting at least three million ounces, and with annual production capability of 300,000 ounces per annum. There is no change to the funding agreements that each party contribute equally to the activities of the alliance. For an asset to stay in the alliance, the two companies must equally fund its exploration and development. These changes therefore broaden and increase Sino Gold's financial capacity to explore in new belts outside of its four development projects.
Key Dates
Sino Gold has requested that its shares be placed in a trading halt on the ASX and the HKSE pending the outcome of the Institutional Offer and Institutional Bookbuild. Its shares are expected to remain in trading halt until prior to the opening of trading on Monday, 26 May, 2008. The record date for the Offer will be 7.00pm (Sydney Time) on Friday, 23 May 2008.
<< ------------------------------------------------------------------------- Institutional Offer ------------------------------------------------------------------------- Institutional Offer opens Tuesday, 20 May 2008 ------------------------------------------------------------------------- Institutional Offer closes for all institutions Wednesday, 21 May 2008 (5.00pm) ------------------------------------------------------------------------- Institutional Bookbuild opens Thursday, 22 May 2008 (5.00pm) ------------------------------------------------------------------------- Institutional Bookbuild closes Friday, 23 May 2008 (11.00am) ------------------------------------------------------------------------- Record Date Friday, 23 May 2008 (7.00pm) ------------------------------------------------------------------------- Settlement of Institutional Offer and Institutional Bookbuild Monday, 2 June 2008 ------------------------------------------------------------------------- New Shares issued under Institutional Offer and Institutional Bookbuild expected to commence trading (on a normal settlement basis) Tuesday, 3 June 2008 ------------------------------------------------------------------------- These dates are indicative only and subject to change. All times and dates refer to Sydney Time -------------------------------------------------------------------------
------------------------------------------------------------------------- Retail Offer ------------------------------------------------------------------------- Record Date Friday, 23 May 2008 (7.00pm) ------------------------------------------------------------------------- Lodgment of prospectus for Retail Offer Monday, 26 May, 2008 ------------------------------------------------------------------------- Prospectus dispatched to eligible retail shareholders Thursday, 29 May 2008 ------------------------------------------------------------------------- Retail Offer opens Thursday, 29 May, 2008 ------------------------------------------------------------------------- Retail Offer closes Thursday, 12 June 2008 ------------------------------------------------------------------------- Retail Bookbuild Thursday, 19 June 2008 ------------------------------------------------------------------------- Settlement of Retail Offer and Retail Bookbuild Wednesday, 25 June 2008 ------------------------------------------------------------------------- Holding statements expected to be dispatched Thursday, 26 June 2008 ------------------------------------------------------------------------- New Shares issued under Retail Offer and Retail Bookbuild expected to commence trading (on a normal settlement basis) Friday, 27 June 2008 ------------------------------------------------------------------------- These dates are indicative only and subject to change. All times and dates refer to Sydney Time ------------------------------------------------------------------------- >>
Information Line
If you are a retail shareholder and you have any questions on your entitlement or whether you are eligible to participate in the Offer, please call the Sino Gold Offer Information Line on 1300 737 760 (local call cost from within Australia) or +61 2 9290 9600 (from outside Australia). Further information regarding the AREO is available at the Sino Gold website at www.sinogold.com.au.
About Sino Gold
Sino Gold has been active in China since 1996. The Company owns 82% of the Jinfeng gold mine in Guizhou Province, southern China, which has Mineral Resources containing 5.3 million ounces and Ore Reserves containing 3.5 million ounces. Jinfeng is one of the largest gold mines in China as the mine ramps up to achieve initial planned production of 180,000 ounces per annum. Sino Gold aims to increase Jinfeng's gold production to optimal levels as quickly as possible. The 95%-owned White Mountain project in Jilin Province, northeast China, is now being developed into Sino Gold's next mine. In December 2007, Sino Gold completed the takeover of Golden China Resources Corporation and announced the Eastern Dragon acquisition. Sino Gold now has projects that provide a clear pathway for the Company to produce 500,000 ounces of low-cost gold annually. Sino Gold is a producing gold company actively pursuing a discovery and acquisition strategy in China. With a "first mover" advantage, it holds a strong competitive position in China. Sino Gold is listed on the Australian Stock Exchange (ASX Code: SGX) and The Stock Exchange of Hong Kong (SEHK Code: 1862).
SGX Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
