First Au paves path for VicGold acquisition, Due diligence investigations completed

Summary

• FAU plans consolidation of VicGold and Snowstorm projects in the Lachlan Fold Belt
• First Au progressing on meeting acquisition stipulations
• Following SPP mega oversubscription, First Au gaining strong investor support

First Au Limited (ASX:FAU) announced the completion of the due diligence investigation pertaining to the intended acquisition of the Victorian Goldfields Pty Ltd (“VicGold”) and its asset including the Victorian Gold Project.

Further definitive agreements related to the acquisition have been executed with the completion being contingent of the Haunted Stream Project. First Au had already announced its plans to acquire Snowstorm project (EL 5505) and the prospecting license (PL 007319), which is conditional upon the completion of the VicGold acquisition.

Click Here, to read more on First Au acquisition of Victoria Goldfields

First Au plans to integrate the additional tenements, Snowstorm project and the VicGold assets to form a larger and consolidated Victorian Gold Project portfolio. The milestone shares as per the approval of a variation of Resource based Milestone conditions (v, vi & vii below) by ASX and will trigger allotments upon achieving the milestone with respect to those leases.

Acquisition Agreement and FAU Progression

The Victorian Gold project is in the East Gippsland region of Victoria on the southern terminal of the world class Lachlan Fold Belt. First Au had announced entering into a binding term sheet agreement to acquire 80% stake in the explorer and its assets.

The acquisition completion was contingent upon these major conditions –

1. Issuance of the flagship Haunted Stream exploration licence application (EL 006816)
2. New Fundraisings of over $1,000,000 by First Au
3. Completion of the due diligence investigations satisfactorily
4. Shareholders approval for the issuance of new shares
5. No withdrawal of applications or revoking of any of the 4 exploration licenses by the regulatory authority

While the granting of exploration license depends on the regulatory authorities and local authorities. First Au has been extremely successful in securing commitments worth $1,207,000, as announced on 15 July 2020 upon the 11x oversubscription of the share purchase plan with applications worth $3,033,500 received against the sought capital raisings of $280,000 following the mega overwhelming response from the investors.

Must Read: First Au’s SPP 11 times oversubscribed on overwhelming response

Payment Structure: As per the acquisition agreement with VicGold, First Au would be required to issue 10 million shares to the vendors as an initial payment on completion of the acquisition.

Further, up to a total of 70 million shares can be issued to the vendors upon achieving one or more milestones. The initial 4 milestone includes granting of ELAs or meeting expenditure milestones, whereas the latter 3 pertain to realising the outcomes of extensive exploration programs.

Details on the milestones-

1. 10 Million shares to be issued upon ground exploration expenditure touching $500,000 levels
2. 10 million shares subject to granting of exploration license applications, EL 005422, EL 006975, EL 006976 and EL 006977
3. 10 million shares upon the total ground expenditure reaching $1,000,000 levels
4. 10 million shares upon the total ground expenditure reaching $2,000,000 levels
5. 10 million on the independent verification of JORC inferred mineral resources of at least 3.11 million tonnes with 1 gram a tonne Gold containing over 100,000 ounces of Gold
6. 10 million on the independent verification of JORC inferred mineral resources of at least 7.775 million tonnes with 1 gram a tonne Gold containing over 250,000 ounces of Gold
7. 10 million on the independent verification of JORC inferred mineral resources of at least 15.551 million tonnes with 1 gram a tonne Gold containing over 500,000 ounces of Gold

The obligation of issuance of milestone shares will lapse in case of 1 or more milestones are not achieved within the 5 years of the completion of the acquisition.

First Au closed at $0.021 on 17 July 2020, with a market capitalisation of $8.22 million.

All financial information pertains to Australian Dollar unless stated otherwise.