Sale Agreement - A1 Gold Mine IPO
28 February 2011
The Board of Heron Resources Limited (ASX:HRR) (Heron / the Company) is pleased to announce that the Company has entered into a binding Agreement (Agreement) with Gaffney's Creek Gold Pty Ltd (Gaffney's Creek) and A1 Consolidated Gold Ltd (A1 Consolidated Gold) relating to interlinked transactions which, on completion, would see:
- A1 Consolidated Gold acquire the A1 Gold Mine in Victoria;
- Heron and Gaffney's Creek become foundation shareholders in A1 Consolidated Gold; and
- A1 Consolidated Gold list on the Australian Securities Exchange (ASX) through an Initial Public Offering of its shares (IPO).
The A1 Gold Mine, located 120km east north east of Melbourne in Victoria, has historical production of over 450,000 ounces of gold from high grade reefs. The mine is currently owned by Gaffney's Creek, with Heron holding a two year option to purchase the mine from Gaffney's Creek. The option, which was scheduled to expire in August 2011, has involved Heron undertaking underground development, drilling and metallurgical studies. Heron has been evaluating the mine for bulk mineable mineralisation which may be supplemented by high grade reef ore. The host dyke is up to 400 metres along strike and up to 80 metres across strike and has been historically mined for selected high grade reefs to the 23 Level over 700 metres below surface.
Under the terms of the Agreement, Heron's option has been extended to January 2012 to accommodate the IPO process.
The Agreement contemplates that A1 Consolidated Gold will progress with its proposed IPO, acquire Heron's option (in return for 20.7 million A1 Consolidated Gold shares) and then exercise the option and purchase the A1 Gold Mine from Gaffney's Creek (in return for 33.333 million A1 Consolidated Gold shares). The acquisition of the option and subsequent exercise are conditional on A1 Consolidated Gold receiving in principle listing approval from the ASX and Heron and A1 Consolidated Gold obtaining any necessary approvals from their shareholders under the Corporations Act or ASX Listing Rules.
A1 Consolidated Gold will assume responsibility for the operation of the mine, including development and drilling, while the proposed IPO is progressed.
To facilitate the IPO process and assist with A1 Consolidated Gold's pre-IPO operations at the A1 Gold Mine, Heron has agreed to subscribe for up to 4.0 million foundation shares and up to 1.5 million seed capital shares in A1 Consolidated Gold.
It is intended for the IPO to raise up to A$30 million for continuing mine development and exploration with the aim of achieving a multi-million ounce resource. Under the terms of the Agreement, Heron will be a cornerstone investor in A1 Consolidated Gold.
A1 Consolidated Gold Managing Director, Mr Dennis Clark said: "We are very pleased that Heron will be a shareholder in our new company. This commitment from Heron supports the potential of the A1 Gold Mine."
Mr Clark said the board and management team of A1 Consolidated Gold are highly experienced, with high grade, narrow vein underground gold mining experience including more than 20 years experience at the A1 Gold Mine. The team members have also been responsible for the operation of various gold mines near Kalgoorlie and more recently a successful IPO gold listing.
Heron Managing Director, Mr Mathew Longworth, said the listing of A1 on the ASX was the best possible progression for the A1 Gold Mine and will allow new shareholders and investors to benefit from the significant resource upside opportunity.
"A1 needs a dedicated and project-specific team to optimize full value from the mine and seek new gold projects," Mr Longworth said.
"We are pleased to have progressed the mine to this phase of development and believe that with this new and experienced management team under this new structure, all shareholders will realize the full potential value available at A1. Heron looks forward to being a key shareholder in A1 Consolidated Gold, while we continue our other exploration and growth programs."
