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RNI shares rise on WA gold asset sale news

RNI shares rise on WA gold asset sale news

Photo by Bloombeg

31st July 2015

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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PERTH (miningweekly.com) – The share price of ASX-listed RNI increased by 60% on Friday as the company announced plans to sell its Western Australian gold assets to fellow-listed Metals X.

The two parties have executed a binding heads of agreement under which RNI would divest of its Grosvenor, Horseshoe and part of its Peak Hill project in exchange for 18-million fully paid Metals X shares, valuing the transaction at A$20.3-million.

Metals X would also advance RNI A$300 000 as an interest-free convertible loan to provide the company with working capital during the sales process.

The three projects host a combined resource of over two-million ounces, while the Grosvenor project also included a one-million-tonne-a-year carbon-in-leach processing plant with substantial infrastructure, including a 100-person village, air strip and borefield.

In April, RNI was forced to resume its hunt for a funding partner for the proposed Grosvenor gold project, after a A$60-million project financing package from a London-based fund fell through.

Metals X CEO Peter Cook on Friday said the gold acquisition was a great one for Metals X and was similar in style to several acquisitions the company had made in the past two years.

“We have acquired a substantial gold resource base with all the plant and infrastructure in place for an exceptional price. It represents another low-cost and low-risk gold production opportunity with a lot of upside.”

Cook noted that the acquisition was also a good fit with the company’s portfolio and would benefit from synergies with the Central Murchison gold project, which was currently under development.

RNI told shareholders that the company would use the proceeds from the sale to help repay its A$23-million debt facility with Taurus Resources No 2 Fund.

The sale of the gold assets to Metals X was also expected to significantly reduce RNI’s yearly exploration expenditure from more than A$3-million to some A$1.2-million.

The completion of the transaction was conditional upon the completion of formal agreements, shareholder approval and an agreement from RNI’s financiers to extend its debt repayment deadlines, as well as other statutory and regulatory approvals.

Meanwhile, Metals X had also agreed to divest of its Chunderloo copper-gold project, in Western Australia, to RNI, for 25-million new fully paid shares in the company, which Cook said provided an additional advanced copper project to RNI’s copper exploration strategy.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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