LionGold plans to raise $100m, eyes spin-offs, stake sales

Mainboard-listed LionGold Corp could list one of its subsidiaries in one to two years time.

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LionGold plans to raise $100m, eyes spin-offs, stake sales

Andrea Soh
31 August 2013

Mainboard-listed LionGold Corp could list one of its subsidiaries in one to two years time.

This is one of several funding options that the gold miner is exploring.

The firm is also in talks with private equity players to explore joint acquisitions or sell a minority stake in its assets, its CEO Nicholas Ng told media and analysts at a briefing yesterday.

Without giving further details, Mr Ng also said that the firm plans to raise $100 million.

With gold prices having fallen 26 per cent from its peak last October to about US$1,322 an ounce now, producing assets have become much more affordable.

“They’re now within our purview,” said head of investor relations Lesley Bendig, adding that the firm sees new market opportunities that did not exist three to six months ago.

LionGold will therefore focus its acquisition strategy on mines that are already in production. This also dovetails with the firm’s plan to reach 200,000 ounces in annualised gold production by 2014.

For the 2014 financial year, the firm aims to integrate its resources and also form technical alliances to undertake projects of a larger scale.

Separately, the firm announced on Monday night that it has agreed to acquire all of the shares of Canadian gold producer Acadian Mining Corporation that it does not own, at 12 Canadian cents apiece.

This represents a premium of about 21.2 per cent to the 20-day volume weighted average price of Acadian shares before the announcement.

Assuming full acceptance and conversion of outstanding convertible notes, the deal will amount to C$7.2 million (S$8.9 million), which will be paid for in cash.

LionGold currently holds 9 per cent of Acadian through the subscription of 6 million new shares in a share placement in March, at a price of 9 Canadian cents per share.

Based in Nova Scotia, Acadian has two flagship properties which hold about 1.33 million ounces of gold resources, with the potential for open pit development.

The investment will provide “an inexpensive foothold in an underexplored gold-bearing region in Canada that is consonant with a longer term plan to create a North American Hub of gold mining operations,” the firm said.

Acadian, which is listed on the TSX Venture Exchange, a public venture capital marketplace for emerging companies, was trading at 11 Canadian cents last Friday, with a market capitalisation of C$7.1 million.

With this, LionGold will have in total five operating assets and two investment assets.

The counter yesterday closed unchanged at $1.16.

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