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Date Posted: Mon, Apr 16 2007, 01:08:30pm
Business Monday 16th April , 2007
MRDC advances talks
MINERAL Resources Development Company Ltd (MRDC) has advanced negotiations to increase Mineral Resource Enga’s shareholding in the Porgera gold mine.
MRDC chief executive officer Francis Kaupa said the company was disappointed they were not given the opportunity by Emperor Mines Limited to access their data room and formally bid for the 20 per cent interest in Porgera Joint Venture it was selling to Barrick Gold Limited.
“However, that's what happens in the real commercial world. The people of PNG have missed out again on the opportunity to acquire a 20 per cent interest in the Porgera Gold Mine,” he said.
“Now that the deal between Barrick and Emperor has been concluded, our role as managers of Mineral Resources Enga would be to try and negotiate with Barrick to see if Barrick can on-sell 5 per cent to MRE so that MRE can increase their equity from the current 5 per cent to 10 per cent.
Mr Kaupa said the process had already began and MRDC would be looking to secure funds to buy that interest at fair market value.
Both Barrick Gold Corporation and Emperor announced on Friday they had entered into a definitive buy and sale agreement over Emperor’s 20 per cent interest in the Porgera mine.
Barrick’s interest in Porgera will increase from 75 per cent to 95 per cent on the completion of this transaction. The total consideration is $US250 million (K786.1 million) in cash plus an adjustment amount. Barrick will be entitled to the production and the economic benefit of the 20 per cent interest in Porgera, from the effective date of April 1, 2007.
In connection with the transaction, Emperor has granted Barrick the option of subscribing up to 15 per cent of Emperor’s present issued capital within 10 days following Emperor’s special shareholders’ meeting.
“Consolidating the ownership of the Porgera mine is part of Barrick’s strategy of owning long-life, world class assets," said Greg Wilkins, Barrick president and chief executive officer.
“Barrick is currently in discussions regarding the possible sale of up to a 5 per cent interest to its joint venture partner, Mineral Resources Enga Limited, for the proportionate acquisition cost paid by Barrick.”
Emperor chief executive officer Brad Gordon said the sale provided an opportunity for the company to clear debt. “We are pleased to have secured a full price for our interest in Porgera,” Mr Gordon said. The transaction follows Emperor’s announcement of February the company would be pursuing a restructuring plan in order to retire debt and realise the full potential of the company’s assets. Following completion of the transaction, Emperor will have no debt and will have cash resources of about $A130 million (K339.7 million).
Emperor’s key mining assets will comprise the wholly-owned Tolukuma gold mine, as well as a copper/gold exploration portfolio incorporating more than 5000 square kilometres of exploration tenements in mineral-rich PNG.
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