Regis Resources (ASX: RRL) Pens Deal to Acquire Stakes in Tropicana Project

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Summary

  • Regis Resources (ASX: RRL) has entered into an agreement with IGO Limited to acquire 30 per cent stakes in the Tropicana Gold Project.
  • The acquisition will diversify the miner’s portfolio by adding a long-life asset with an attributed reserve of 0.8Moz and a mine life of 10 years.
  • The company will fund the acquisition through the combination of equity raising and a syndicated term loan facility.

Australia’s mid-tier exploration company, Regis Resources (ASX: RRL), is geared up to acquire IGO’s stake in the Tropicana gold mine located in Western Australia.

In the significant announcement made today, the gold miner stated that it had entered into a conditional binding agreement with IGO Limited to acquire 30% of interests in the Tropicana Gold Project under a A$903 million deal.

Must Read: Which Is A Better Investment: Gold or Stocks?

Tropicana is among the leading producing open-pit and underground mines located in the Albany-Fraser Orogeny in Western Australia, and the addition of this mine in Regis' portfolio will diversify the gold miner's robust portfolio.

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Transaction Highlights:

Upon the completion of the transaction, Tropicana will become a 30:70 unincorporated JV between Regis and AngloGold.

AngloGold is the manager of unincorporated JV and is responsible for the management of the Tropicana mine. The current acquisition will provide Regis with immediate exposure to high cash flows.

The acquisition will increase the miner’s group reserves by around 22%, resources by around 30%, and FY20 annual production by about 39%. At the same time, it will also reduce AISC by around 2%.

In addition to that, the acquisition will enhance Regis’ existing portfolio by adding a long-life asset to the miner's portfolio with an attributed reserve of 0.8Moz and a mine life of 10 years.

Tropicana is one of the largest and lowest-cost gold mine located in Australia, which has recorded the gold production of 463koz in FY20 and forecasted to produce gold between 380koz to 430koz in FY21.

Funding for Acquisition:

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The total funding of A$903 million cash will be funded by combining equity raising and syndicated term loan facility. The gold miner is expected to launch a A$650 million equity raising by the placement of 74 million new shares to raise A$200 million and an entitlement offer to raise the remaining amount of A$450 million.

All new shares will be offered to the shareholders at an issue price of A$2.70 per share, representing a 14.8 per cent discount on the last traded price of Monday.

Good Read: Why is Regis Resources’ (ASX:RRL) Ben Hur Gold Project in the spotlight?

The company has also entered into credit approved term sheet with the Bank of America to secure a new A$300 million syndicated term loan facility.

The 30 per cent stakes of IGO is understood to have attracted bids from other ASX-listed gold miners too, like Evolution Mining (ASX: EVN) and Gold Road Resources (ASX: GOR).

In addition to that, another ASX gold miner, Theta Gold Mines Limited (ASX: TGM), has announced a maiden underground Prefeasibility Study for Beta, Frankfort, and CDM mines. Alto Metals (ASX: AME) hit gold at Sandstone Project.


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