After announcing an exclusivity agreement with Kinross Gold Corporation a few weeks ago, aimed at negotiating a potential purchase, Asante Gold Corporation has finally entered into a share purchase agreement to acquire Kinross’ 90 per cent stake in the Chirano Gold Mine.
The 90 per cent acquisition of Kinross’ Chirano Gold Mine goes for a total consideration of $225 million. The remaining 10 per cent is held by the government of Ghana as carried interest, as stipulated in the mining fiscal regime. Thus, this applies to the new asset ownership of Asante Gold.
In a press release today, April 25, 2022, Asante Gold stated that the structure of the purchase includes an upfront consideration for the Chirano Acquisition comprising of $115 million in cash and $50 million in common shares of Asante.
Payment of the $50 million in Asante Gold’s common shares is based on the 30-day volume-weighted average price of the Shares prior to closing of the Chirano Acquisition. That said, “…provided the issuance if the Asante Shares will not result in Kinross exceeding a 9.9% share ownership in Asante.”
Likewise, Kinross is entitled to receive a total deferred payment of US$60 million in cash, with 50% payable on the first anniversary of closing and balance payable on the second anniversary of Closing.
Based on the above considerations, “if the 9.9% share ownership limit is reached, the remainder of the $50 million in share consideration will be paid by increasing the defeated cash payments in equal portions.” That said, “Kinross has agreed that it will hold its Asante Shares for at least 12 months following the Closing.”
Completion of Transaction
According to the release, “the transaction is expected to be completed on or round May 31, 2022,” adding that, “The Government of Ghana has issued a letter of No objection to the change of control of Chirano and the transaction is not subject to a financing condition.”
Dave Anthony, President and CEO of Asante, said:
“We are excited to add the Chirano operation to our base of gold production in Ghana. It presents an excellent opportunity for synergy with our other Ghanaian assets and represents “the next step” for our vision to build a leading gold mining company in Ghana and is committed to sharing the benefits of its activities with the local community and Ghana. Chirano is a well-run operation and our intention is to retain its employees, to ensure a smooth transition, with uninterrupted production.”
Dave Anthony
Douglas MacQuarrie, Non-Executive Chairman of Chirano said:
“The Bibiani and Chirano assets combined under one ownership will cover an entire district scale gold trend exceeding 53km in length. Total gold production from the mines to date exceeds 8 million ounces. With two modern process plants located 20km apart, exploration success anywhere along the gold trend can be efficiently accessed. Our recent exploration success at Bibiani-South Russel is indicative of the discovery potential that remains along the trend.”
Douglas MacQuarrie
Based on an analysis of Asante’s expected gold production from its Bibiani mine and Chirano’s gold output for 2021, Asante’s Gold production is expected to rise to a potential of approximately 400,000 ounces of gold in the near-term.
Asante previously stated that it has plans to make its first gold pour in Q3 2022 from its Bibiani concession. In addition to the Bibiani mine, the coming online of Kinross’ Chirano mine means Asante Gold will exceed earlier estimates of production capacity at 175,000 oz of gold in the first 12 months of operation. This would also add to the expected year-on-year production capacity from 220,000 to 270,000 ounces for a minimum of seven years.
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