Queensland, Australia-based SMC Gold will almost triple it share base by issuing up to 200 million shares in part to acquire a 70% stake in Chilean gold and copper miner Compania Minera Tamaya (CMT).
SMC expects the share issue to raise up to A$12.5 million, of which around A$6 million would be used for the acquisition. The balance will be applied to working capital, debt repayment, and to fund exploration on its projects in Queensland.
CMT owns several operating gold-copper mines about 410 km north of the capital, Santiago. The mines are home to an estimated resource of 8.6 million tonnes running 3.4 grams gold and 0.62% copper, for just shy of 1.3 million equiv. gold ounces.
Based on a gold price of US$400 per oz. and a copper price of US$1.20 per lb., SMC figures the assets have a net present value of about US$31.3 million (at a discount rate of 10%).
SMC plans to boost mining rates at the complex to 300,000 tonnes per year in 2005, with a further increase to 650,000 tonnes in 2006. The company says the plan will result in average after-tax cash flow of US$9 million per year over ten years.
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