RNC will host a call/webcast on February 13 at 10:00 a.m.
(Eastern Time) to discuss the agreement. North American
callers please dial: 1-888-231-8191, international callers
please dial: (+1) 647-427-7450. For the webcast of this event
click [here] (replay access
information below).
TORONTO, Feb. 13, 2017 /CNW/ - RNC Minerals (TSX: RNX)
("RNC") is pleased to announce it has reached a toll
processing and purchase option agreement (the "Agreement")
with Westgold Resources Limited ("Westgold") at Westgold's
South Kalgoorlie Operations ("SKO"). The Agreement provides
RNC with a lower cost toll milling alternative and the option to
significantly expand its Kalgoorlie footprint through a potential
acquisition of the SKO mining assets and milling infrastructure
located approximately 30 km from RNC's Beta Hunt Mine.
Mark Selby, President and CEO of
RNC, commented "The option to acquire Westgold's SKO operations, if
exercised, provides significant synergies with our Beta Hunt Mine.
It would transform RNC's gold operation in Western Australia to a multi-mine operation
with a 1.2 Mtpa mill generating significantly in excess of 100koz
of gold annually, anchored by a 4 million ounce resource base and
nearly 1,000 square kilometer land position in the highly prolific
Kalgoorlie gold region. This is a transaction that can generate
real operational synergies for our shareholders. The option
structure allows RNC to realize the value from the ramp-up of Beta
Hunt and look for opportunities to finance the exercise of the
option in a way that maximizes value for our shareholders."
Selby continued: "We are pleased to partner with Westgold, a
very experienced and well-respected operator in Western Australia, who recognizes the
potential for significant long-term, low cost gold production from
RNC's Beta Hunt mine. We expect to realize over $7 million in cost savings during the processing
arrangement with Westgold, improving RNC's operating and all-in
sustaining costs in 2017 and 2018."
Under the toll Agreement, Westgold has granted RNC access to 50%
of its plant capacity at SKO on an approximate three weeks on /
three weeks off basis for a 12 month period commencing July 1, 2017. RNC will pay Westgold toll
processing fees on a fixed plus variable arrangement on commercial
terms. It is anticipated that the total toll processing and
transportation costs will be materially lower than RNC is currently
budgeting for processing of Beta Hunt ore in 2017 and beyond.
Westgold has also granted RNC a six-month option (the
"Option") to purchase the SKO operations outright,
including all existing mining, milling and infrastructure, for
A$80 million (the "Purchase
Price"). The option to purchase SKO excludes Westgold's lithium
mining and royalty interests over the Mt Marion Lithium Project.
RNC will pay Westgold an option fee of A$4million, equal to 5% of the Purchase Price, to
be satisfied by the issuance of RNC common shares. This fee will be
deducted from the Purchase Price on an exercise by RNC of the
Option. RNC is entitled to extend the Option for an additional six
months by paying an additional 5% fee (the "Extended Option
Payment"). Should RNC exercise the Option after six months,
only the Extended Option Payment shall be deducted from the
Purchase Price.
To secure these tolling rights and option to acquire the SKO
business, RNC will issue a total of 23.4 million shares worth
approximately $8 million. In the
event RNC elects to exercise the Option, the remaining Purchase
Price would be satisfied with a combination of cash and common
shares of RNC (with the share portion increasing Westgold's
ownership interest to up to 19.9% of RNC). In the event that
Westgold receives a takeover offer and RNC elects not to exercise
the Option, Westgold would be required to refund the option fee(s)
to RNC.
The Agreement is subject to customary regulatory and exchange
approvals for transactions of this nature. RNC anticipates the
closing of the Agreement to occur on or about March 1, 2017.
Overview of SKO
The SKO operation comprises the HBJ
underground mine, a number of open pits, and the Jubilee Mill, a
1.2 Mtpa gold processing plant and associated infrastructure. On
August 18, 2016 Westgold published
JORC compliant Measured, Indicated, and Inferred Resources for SKO
as of June 30, 2016 of 50.9 Mt of ore
grading 2.27 g/t Au, containing approximately 3.7 Moz of gold, and
Proven and Probable Reserve of 2.3 Mt of ore grading 2.60 g/t Au,
containing 192,000 ounces of gold1. Westgold has moved
the project through to a steady state operation, via the
re-development of the HBJ underground mine. According to Westgold,
the SKO assets subject to the Option are expected to produce
approximately 60,000 ounces per year for 3+ years at a steady state
AISC of approximately $A1,250
($US 950) per ounce2. RNC
has processed its ore from the Beta Hunt Mine at the Jubilee
mill.
- Westgold Memorandum dated December 2,
2016
- Westgold Corporate Presentation dated January 27, 2017
Financial Advisor
Haywood Securities Inc. has acted as
financial advisor to RNC and Canaccord Genuity (Australia) Limited has acted as financial
advisor to Westgold in connection with the Agreement.
Conference Call
RNC will be hosting a conference call today beginning at
10:00 a.m. (Eastern Time).
Live Conference Call and Webcast Access Information:
North American callers please dial: 1-888-231-8191
Local and international callers please dial: 647-427-7450
A live webcast of the call will be available through CNW Group's
website at: www.newswire.ca/en/webcast/index.cgi
A recording of the conference call will be available for replay
for a one week period beginning at approximately 1:00 p.m. (Eastern Time) on February 13, 2017, and can be accessed as
follows:
North American callers please dial: 1-855-859-2056; Pass Code:
71995793
Local and international callers please dial: 416-849-0833; Pass
Code: 71995793
About RNC
RNC is a multi-asset mineral resource
company focused primarily on the acquisition, exploration,
evaluation and development of base metal and precious metal
properties. RNC's principal assets are the producing Beta Hunt gold
and nickel mine in Western
Australia, the Dumont Nickel Project located in the
established Abitibi mining camp in Quebec and a 30% stake in the producing Reed
Mine in the Flin Flon-Snow Lake region of Manitoba, Canada. RNC also owns a majority
interest in the West Raglan and Qiqavik projects in Northern Quebec. RNC has a strong management
team and Board with over 100 years of mining experience at Inco and
Falconbridge. RNC's common shares
trade on the TSX under the symbol RNX. RNC shares also trade on the
OTCQX market under the symbol RNKLF.
Cautionary Statement Concerning Forward-Looking
Statements
This news release contains "forward-looking information"
including without limitation statements relating to the liquidity
and capital resources of RNC, production guidance and the potential
of the Beta Hunt and Reed mines.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of RNC to be materially different from
any future results, performance or achievements expressed or
implied by the forward-looking statements. Factors that could
affect the outcome include, among others: future prices and the
supply of metals; the results of drilling; inability to raise the
money necessary to incur the expenditures required to retain and
advance the properties; environmental liabilities (known and
unknown); general business, economic, competitive, political and
social uncertainties; accidents, labour disputes and other risks of
the mining industry; political instability, terrorism, insurrection
or war; or delays in obtaining governmental approvals, projected
cash costs, failure to obtain regulatory or shareholder approvals.
For a more detailed discussion of such risks and other factors that
could cause actual results to differ materially from those
expressed or implied by such forward-looking statements, refer to
RNC's filings with Canadian securities regulators available on
SEDAR at www.sedar.com.
Although RNC has attempted to identify important factors that
could cause actual actions, events or results to differ materially
from those described in forward-looking statements, there may be
other factors that cause actions, events or results to differ from
those anticipated, estimated or intended. Forward-looking
statements contained herein are made as of the date of this news
release and RNC disclaims any obligation to update any
forward-looking statements, whether as a result of new information,
future events or results or otherwise, except as required by
applicable securities laws.
SOURCE RNC Minerals