October Australian energy & resources market update

Articles

Mining

RECENTLY COMPLETED DEALS

Thor Mining acquires American Vanadium

On 10 September 2020, ASX and AIM-listed Thor Mining PLC completed its acquisition of 100% of the shares in American Vanadium Pty Ltd.

The purchase included Colorado-based Standard Minerals INC and Utah-based Cisco Minerals INC, which are wholly-owned subsidiaries of American Vanadium.  

Access the full announcement here.

RECENT ANNOUNCEMENTS

Mali Lithium seeks to raise A$70m via placement and share purchase plan to acquire an 80% interest in Morila Gold Mine

In our September edition of the E&R Market Update, we reported that ASX-listed Mali Lithium Limited (to be renamed Firefinch Limited) announced that it had entered into an agreement to acquire an 80% interest in the Morila Gold Mine in the Republic of Mali from Barrick Gold Corporation and AngloGold Ashanti.  The transaction is scheduled to close on 31 October 2020.

On 9 September 2020, the company announced a placement of A$64 million in two tranches to institutional and sophisticated investors.  As outlined in its announcement on 7 October 2020, the first tranche of A$7.6 million has been completed and the balance of A$56.4 million is subject to shareholder approval at a general meeting to be held on 23 October 2020.  A Share Purchase Plan to raise up to A$6 million has also been launched.

Funds raised will be applied primarily to the acquisition of the 80% interest in the Morila Gold Mine.

Access the full announcements dated 9 September 2020 here and 7 October 2020 here.

Cardinal Resources directors accept Shandong Gold Mining’s revised takeover offer

Further to our previous updates regarding the off-market takeover offer of ASX-listed Cardinal Resources Limited (Cardinal) from Shandong Gold Mining (Hong Kong) Co., Ltd, the company announced on 15 September 2020 that its directors, who collectively hold approximately a 6.07% interest in the company, each instructed their broker/controlling participant to initiate acceptance of the offer in respect of all of the company’s shares they own or control.

The announcement follows a release on 7 September 2020 in which the board unanimously recommended that Cardinal’s shareholders accept Shandong’s revised offer to purchase all Cardinal shares at a cash price of A$1.00.  Shandong’s offer values Cardinal at approximately A$565.6 million on a fully diluted basis. The offer followed rival bidder Nord Gold S.E.’s revised offer, which increased from A$0.66 to A$0.90 per share on 2 September 2020.

Access the full announcements dated 15 September 2020 here, 7 September 2020 here and 2 September here.

Details of the conditions and previous offers are detailed in our July, August and September editions of the E&R Market Update. 

Magmatic Resources proposes to demerge Moorefield Gold Project, subsidiary agrees to acquire two projects with intent of listing on ASX

On 18 September 2020, ASX-listed Australian junior exploration company Magmatic Resources Limited (“Magmatic”) announced a series of transactions involving its wholly-owned subsidiary, Australian Gold and Copper Ltd (“AGC”).  

Magmatic will demerge its Moorefield Gold Project in the central Lachlan Fold Belt in New South Wales into AGC.  ACG has agreed to purchase two Central Lachlan gold/polymetallic projects from New South Resources Pty Ltd (“NSR”), with the intent of a combined AGC listing on the ASX.

NSR will receive as consideration AGC shares amounting to a 40% interest in AGC pre-IPO, with Magmatic holding the remaining 60% in AGC pre-IPO. Magmatic will make an in-specie distribution to its shareholders of up to 50% of the AGC shares that it holds so that its shareholders own shares in both Magmatic and AGC.  AGC will then seek to list on the ASX.  

Access the full announcement here.

Calidus Resources to acquire Blue Spec Gold/Antimony Project for A$19.5m

On 21 September 2020, ASX-listed Australian gold producer Calidus Resources Limited announced that it will acquire the Blue Spec Project, also known as the Antimony Project, in the Pilbara region of Western Australia, from Novo Resources Corp. for A$19.5m cash consideration.

Blue Spec has a historical production of more than 25g/t Au1 and expects synergies with Calidus’ Warrawoona Gold Project, which is within trucking distance of the Blue Spec Project. A licence agreement permitting Calidus’ access to Novo-owned roads is expected to facilitate transport between the two projects.

Access the full announcement here.

BHP, Encounter sign Elliott Copper Project option deal

On 24 September 2020, ASX-listed BHP Group Ltd announced that it entered into an Option Agreement with Encounter Resources Limited in relation the Elliott Copper Project in the Northern Territory.

The Option Agreement provides BHP the right to enter an earn-in and joint venture agreement to earn up to 75% interest in the Elliott Copper Project by spending up to A$22 million over 10 years, following the completion of a jointly designed and funded validation program.

Access the full announcement here.

Sandfire Resources’ stake in Sams Creek Gold Project to be acquired by Auris Minerals

On 30 September 2020, ASX-listed Auris Minerals Limited announced that it is set to acquire Sandfire Resources Limited’s interest in the Sams Creek Gold Project, one of the largest undeveloped gold projects in New Zealand.

The deal comprises a total deemed consideration of A$8.2 million in new ordinary shares to acquire 100% of Sandfire’s wholly-owned subsidiary Sams Creek Gold Limited. Completion is subject to shareholder and regulatory approvals.

Access the full announcement here.

MARKET RUMOURS AND OPPORTUNITIES

Marmota considering partnership options for Aurora Tank gold project; receives interest for uranium assets – chairman

On 8 September 2020, Mergermarket reported that ASX-listed South Australian mining explorer Marmota Limited may consider a partnership deal for its Aurora Tank gold asset located in South Australia as the project progresses toward production, according to the company’s chairman, Colin Rose.

The company is also open to other strategic partnership deals such as engaging a third party to undertake earthworks and move earth equipment and in return, share some gold profits. Rose noted that the composition and equity component of any such agreement is yet to be determined. He also reportedly stated that it is unlikely for Marmota to pursue a joint venture at a project equity level at this stage.

Separately, the company has been approached by potential buyers for its Junction Dam uranium project in South Australia and is open to further expressions of interest. Marmota may sell the assets, form a joint venture for their development, or otherwise retain the project entirely. According to the report, it plans to launch a formal process after assessing price movements. Marmota announced in June that it had begun a strategic review of its uranium assets.

South32 hires Scotiabank to sell portfolio of mineral royalties

On 9 September 2020, The Australian Financial Review reported that ASX-listed South32 Limited has launched a divestment process to sell a portfolio of mineral royalties held over base metals and gold mines operated by third parties.

The company is understood to have appointed Scotiabank to find buyers, and Scotiabank is reportedly marketing the portfolio to specialist investment funds and other buyers. South32 is calling for bids before the end of 2020.

The portfolio includes South32’s right to a small percentage of future revenue from tenements in the Pilbara region in Western Australia, owned by ASX-listed gold company Capricorn Metals Limited, and the Mirador copper mine in South America.

IGO commences strategic review of 30% stake in Tropicana Gold Mine

Further to our September edition of the E&R Market Update, ASX-listed IGO Limited announced on 11 September 2020 that it has commenced a strategic review of its options in relation to its 30% interest in the Tropicana gold mine. An eventual sale of the asset would allow IGO to narrow its focus to the company’s core strategy to become a supplier of battery minerals, as The Australian Financial Review reported on 10 September 2020.

The other 70% of the asset is owned by AngloGold Ashanti Australia, which The Australian Financial Review contemplated as the most logical acquirer in its report on 13 September 2020. AngloGold holds pre-emptive rights and currently operates the mine.

On the other hand, a report by The Australian on 13 September 2020 noted Northern Star Resources Limited, Evolution Mining Limited and Saracen Mineral Holdings Limited as logical buyers and that such groups may lobby behind the scenes to convince AngloGold to also divest its stake so that an incoming purchaser can gain an operating, rather than a passive, stake.

Access the full announcement here.

VHM seeking buyers through Standard Chartered – report

On 13 September 2020, The Australian reported that Victoria-based rare earths miner VHM Limited has hired Standard Chartered to launch a sales process to sell the business.

The purchase price for the company, which holds one of the highest-grade rare earth deposits with a potential value of up to A$1.3 billion, reportedly may be up to A$500 million. The company holds several exploration tenements in the Loddon Mallee region of Victoria, including the Goschen Zircon and Rare Earth Mineral project.

Base Resources weighs JV options for Toliara project

On 17 September 2020, Mergermarket reported that ASX-listed mineral sands miner Base Resources Limited is in discussions with potential joint venture partners for its Toliara project in Madagascar, according to managing director Tim Carstens. Downstream customers, financial investors and mining peers are all being considered but the project is suspended and parties cannot execute any agreement without first securing fiscal terms with the government of Madagascar. Carstens declined to indicate the equity stake a joint venture partner would acquire in the project.

Base Resources hopes to conclude negotiations on fiscal terms and offtake agreements by the end of this calendar year, before it looks to secure funding for the project.

Base Resources’ definitive feasibility study outlines US$595 million of total funding for the project, with 60% debt funding. The company is working with Endeavour Financial for debt funding but is likely to engage potential JV partners without external advisers, according to Carsten.

Apollo Consolidated may consider domestic gold acquisitions

On 21 September 2020, Mergermarket reported that ASX-listed Australian gold exploration company Apollo Consolidated Limited may consider small-scale domestic gold acquisitions that are located nearby its Lake Rebecca gold project.

Managing Director Nick Castleden reportedly told Mergermarket that the company is considering all development and financing opportunities, including approaches from successful multi-project gold miners for a joint venture deal.

Oil and gas

RECENT ANNOUNCEMENTS

WhiteBark announces sale process for Warro Gas Project

On 2 September 2020, ASX-listed oil and gas explorer WhiteBark Energy Limited announced the launch of a formal sale process for its 100% interest in the Warro Gas Project, a dormant asset in Western Australia’s Perth Basin, being one of the largest undeveloped onshore gas fields in the state.  WhiteBark requested that prospective buyers submit non-binding indicative bids by 9 October.

Adelaide Equity Partners has been appointed to facilitate the process, which may involve the outright sale of all or part of the asset, farm-in or an alternative transaction.  According to the Australian Financial Review’s report on 1 September 2020, the project has been dormant for four years due to technical challenges relating to the extraction of gas and prior to that, around A$100 million was spent on the project.

Access the full announcement here.

Pilot Energy to fully acquire Royal Energy for A$143.9m

On 25 September 2020, ASX-listed Pilot Energy Limited announced that it has entered into an agreement with Royal Energy Pty. Ltd., a New South Wales based privately-owned Australian oil and gas company, under which Pilot will buy 100% of the shares in Royal in an all-scrip acquisition for A$143.9 million.

Royal’s key asset is a 21.25% economic interest in production license WA-31-L, containing the Cliff Head Oil Field and associated infrastructure and assets located in the Perth Basin off the coast of Western Australia.  Pilot has reported that becoming part of the Cliff Head JV is highly complementary to its focus on the development of the Mid West Wind & Solar Project and Pilot’s 100% ownership and operatorship of WA-481-P, located immediately adjacent to and surrounding the Cliff Head Oil Field.

Royal also holds a 1.5% stake in ASX-listed Vintage Energy Limited, which holds interests oil and gas assets across the Galilee, Otway, Bonaparte, and Cooper-Eromanga basins in Australia.  The transaction is conditional on shareholder approval, which is reportedly expected to be received at the extraordinary general meeting to be held in early November 2020.

Access the full announcement here.

MARKET RUMOURS AND OPPORTUNITIES

ExxonMobil sale of stake in Gippsland Basin – update

In our July edition of the E&R Market Update, we reported that ExxonMobil would continue with its plans, announced in September 2019, to sell its 50% stake in the Gippsland Basin oil and gas venture. On 29 September 2020, the Australian Financial Review Street Talk Column reported that indicative bids for ExxonMobil’s entire Bass Strait oil and gas portfolio, which analysts expect is likely to be worth around A$3 billion, are due on 15 October 2020. The portfolio includes ExxonMobil’s 50% operating interest in the Gippsland Basin Joint Venture, a 32.5% stake in the Kipper Unit Joint Venture, a 50% operating interest in the Blackback Joint Venture and Mulloway Joint Venture, and a 25% operating interest in the VIC/L25 Joint Venture.

Chevron selling stake in North West Shelf – update

Further to our August and September editions of the E&R Market Update, the Australian reported on 10 September 2020 that ASX-listed Woodside Petroleum Limited is likely to be in discussions with Chevron to double its 16.67% stake in the North West Shelf project off the north-west coast of Australia and that Chevron had provided Woodside with an information memorandum for the sale of its stake.  Infrastructure investment fund Global Infrastructure Partners, Australian investment management company IFM and Canada Pension Plan Investment Board have also expressed interest in the purchase of Chevron’s stake.

Undisclosed sources reportedly told the Australian that Woodside and Chevron have held talks about transactions that extend beyond the North West Shelf. Chevron also operates the Wheatstone gas project in Western Australia and owns 64.14% of the asset, with Woodside holding a 13% interest, the Kuwait Foreign Petroleum Exploration Company owning a 13.4% interest and the other shareholders owning the remainder. 

Electricity & Renewables

RECENT ANNOUNCEMENTS

Iberdrola acquires UAC’s 20% stake in Infigen 

Further to our September edition of the E&R Market Update, on 11 September 2020 ASX-listed Infigen Energy Ltd announced that Iberdrola had acquired former rival bidder UAC Energy Holdings Pty Limited’s approximately 20% stake in the company for A$0.92 per share. UAC had acquired shares in Infigen at an average price of approximately A$0.794 per share.

As at 14 September 2020, Iberdrola held a 97.7% interest in Infigen. Iberdrola has subsequently announced that its offer is best and final and that the bid offer period has been further extended until 21 October 2020.

Access the full announcements dated 11 September 2020 here and 14 September 2020 here.

 

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).