Catalyst Metals Limited (ASX: CYL) will be acquiring a Toronto-based company operating in Australia to form a new mid-tier gold producer in the country.
Catalyst announced the $55 million purchase of Superior Gold Inc. (TSX-V: SGI) (OTCQX: SUPGF) on Friday and will be receiving all of the company’s issued and outstanding shares along with its Plutonic gold operation in Western Australia.
Catalyst will also be acquiring all remaining shares of Vango Mining Ltd. (ASX: VAN) which owns the Marymia Gold Project located adjacent to the Plutonic Gold Mine. A well-maintained haul road has been constructed between the two operations.
The Plutonic mining operation being acquired by Catalyst has a 5.9 million ounce gold resource and produces 70 kilo-ounces per year. The mine has a 3-million-tonne-per-annum carbon in pulp (CIL) processing capacity, an airstrip, a 37-piece mobile equipment fleet for underground operations and a camp capable of accommodating 364 people — all valued at AUD$50 million.
“The combination of the large resources, big processing capacity and considerable exploration upside gives the combined group genuine scale, long mine life, strong cashflow and outstanding growth prospects, all in the heart of a world-class gold belt in WA. We think this will better appeal to all investors,” said James Champion de Crespigny, Managing Director of Catalyst Metals.
Superior shareholders will be receiving one Catalyst share for every 2.8 shares they hold and will own up to 23 per cent of the new mid-tier gold producer following completion of the transaction and conclusion of the Vango acquisition.
“The transaction provides Catalyst and Superior shareholders with a unique opportunity to benefit from a highly logical and synergistic consolidation that will maximize value from the Marymia-Plutonic gold belt,” said Chris Jordaan, President and CEO of Superior Gold.
Australia is the third largest gold producer in the world and approximately 60 per cent of its gold resources come from Western Australia, according to the World Gold Council.