17th Nov 2015 11:42
LONDON (Alliance News) - Resource development company Ferrex PLC on Tuesday said it has struck a deal to acquire Chaffers Mining in Australia, with a view to the company starting production from the second quarter of 2016.
Chaffers is a private company which has negotiated a five-year tribute agreement with Paddington Goldfields, a subsidiary of Norton Goldfields, the Australian gold miner. The deal covers the mining of certain gold deposits on Norton-owned leases located in Kalgoorlie in Western Australia.
Ferrex said the deal will allow it to start production and cash generation with only working capital expenditure from the second quarter of 2016. It will use the funds from these to back the development of the Nayega Manganese Project in Togo, once a mining permit for that project has been secured.
Production from the newly-acquired sites will initially target around 20,000 to 30,000 ounces of gold per year.
Ferrex will cover the consideration of GBP465,000 for Chaffers via the issue of shares at 0.5 pence per share. It will pay another GBP465,000 instalment, also in shares, once production hits 10,000 ounces. Shares in Ferrex were down 3.3% to 0.435 pence on Tuesday.
Peter Hepburn-Brown, an executive at Chaffers, will join Ferrex's board as a non-executive director, while Chaffers Non-Executive Director Peter George will become Ferrex's chief operating officer.
"It is very rare to find an opportunity which can deliver production in under six months from acquisition and therefore I am personally very excited about this project, which fits our goal of rapidly delivering cash flow at a low cost," said Ferrex Managing Director Dave Reeves.
By Sam Unsted; [email protected]; @SamUAtAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
FRX.L