South Africa’s second-largest gold-mining group, Gold Fields, on Monday announced that it will acquire Canadian-listed Bolivar Gold for $330-million (R2,2-billion) and merge the company with its international assets in Ghana and Australia.
Bolivar shareholders will receive Can$3 per common share. This consideration equates to a premium of 40,9% over the volume weighted average trading price of Bolivar over the prior 30 trading days and a premium of 18,6% on the closing price last Friday, Gold Fields said.
In accordance with the trust indenture, the transaction will trigger the redemption of the convertible debentures at Can$1 095,25 in cash per Can$1 000 principal amount, for a total amount of $24,1-million, included in the total purchase consideration.
The transaction requires approval by 66,66% of Bolivar shareholders and warrant holders, of which Gold Fields currently owns approximately 11% of the common shares and about 32% of the BGC.WT.A warrants.
Completion of the transaction is also subject to the execution of a definitive agreement by November 30, approval of the South African Reserve Bank and certain other regulatory approvals, Gold Fields said.
The board of directors of each company has resolved to approve the transaction.
The board of directors of Bolivar has appointed an independent committee to oversee the process, including inter alia an application for exemption from the requirement to seek an independent valuation of Bolivar, failing which an independent valuation will be obtained.
The recommendation of Bolivar’s board of directors is supported by a fairness opinion from its financial adviser, GMP Securities.
“It is anticipated that the transaction will be concluded in January 2006,” Gold Fields said.
Bolivar, which is listed on the Toronto Stock Exchange, operates the Choco 10 open-pit gold mine in the El Callao gold district in Bolivar state, Venezuela, which achieved commercial production on August 1 this year.
Total production for the final five months of 2005 is expected to be about 48 000 ounces, increasing to about 190 000 oz during next year.
By December 31 last year, the Choco 10 property had 1,3-million oz of proven and probable reserves from 21,4-million tonnes of ore at an average grade of 1,9 grams per tonne, contained within a measured and indicated resource of 1,8-million oz and a further 1,7-million oz of inferred resource.
The CEO of Gold Fields, Ian Cockerill, said: “This transaction is consistent with our growth strategy aimed achieving an additional 1,5-million ounces of international production by 2009. We believe that El Callao is a highly prospective gold district and that the Choco 10 mine will give us a strong operational foothold from which to grow in this part of the world.”
Bolivar CEO Serafino Iacono stated: “This transaction validates Venezuela as a favourable place to do business and we are confident that Gold Fields’ involvement will contribute positively to the development of its mining industry.”
Gold Fields and Bolivar have an existing exploration joint-venture agreement covering about 25 000ha in the El Callao district surrounding the Choco 10 mine.
The region is highly prospective and significant potential exists to increase reserves and production.
El Callao is part of a well-established gold-mining region with historic production dating back more than 200 years.
There are several other gold mines in the region, including the Colombia mine owned by CVG-Minerven; the Tomi and La Victoria mines owned by Crystallex; the La Camorra mine and Mina Isidora development project owned by Hecla; and the privately owned San Raphael mine.
“We believe that through responsible mining practices, Gold Fields can make a meaningful contribution to sustainable development in Venezuela. Gold Fields has been actively involved in exploration in Venezuela since 1992 and we have come to realise that there is excellent geological potential in the country.
“Bolivar has done a commendable job in advancing Choco 10 to production and initiating social programmes in the local community.
“We feel that Gold Fields can build on this foundation of sustainable development as it continues to explore and develop Choco 10 and our adjacent joint-venture concessions,” said Cockerill.
Orion Securities acted as exclusive financial adviser to Gold Fields.
Bolivar has retained GMP Securities and Endeavour Financial as its financial advisers. — I-Net Bridge