Kaiser Reef to turn into a Gold producer, Acquiring Golden River Resources

Summary

• Kaiser Reef entered into an agreement to acquire operational A1 gold mine and Porcupine Flat processing plant
• Kaiser set to transition into a much bigger operating gold player with immediate gold production post acquisition
• Kaiser to raise $7.5M via issuance of 25,000,000 Shares at an issue price of $0.30 per Share

Gold explorer, Kaiser Reef Limited (ASX:KAU) announced entering into an conditional option acquisition agreement with Golden River Resources Pty Ltd to acquire the key gold mining and processing plant in the Victorian Goldfields, The agreement includes the following assets-

• 4 highly prospective granted Mining Leases including 3 within the Bendigo Block and 1 at Woods Point
• Maldon Goldfield with historic production of over 1,740,000 ounces of gold at an average grade of 28 g/t gold
• Currently operating, A1 Gold Mine with historic production of 620,000 ounces of gold since 1861
• Currently operating, Porcupine Flat gold Beneficiation plant located at Maldon

Must Read: Kaiser Reef initiates initial drilling program at Stuart Town Project in the Lachlan Fold Belt

Why Victorian Goldfields?

Upon completion of the acquisition, Kaiser will gain a major landholding which includes an operating gold mining operation in the prolific and trending Victorian high-grade gold district. The project embraces goldfields with exceptional gold production legacy yet poorly exposed to modern exploration techniques.

Porcupine Flat gold processing plant: Source: Kaiser Reef ASX Update 1 October 2020

The au courant audience must note that the Victorian gold fields support highly profitable high-grade gold operations. The acquisition agreement includes one of the highest-grade gold mines in Victoria, the Nuggetty Mine which produced 301,000 ounces of gold at an average gold grade of 184 grams per tonne.

Interesting Read: Kaiser Reef initiates initial drilling program at Stuart Town Project in the Lachlan Fold Belt

Kaiser Reef’s immediate transition to a Gold Producer from a recently listed Junior Explorer

Kaiser will gain access to an operating gold mine and process plant with immediate gold production from the A1 Gold Mine.

Portal to the A1 underground mine (L), High grade quartz vein with visible gold (R): Source: Kaiser Reef ASX Update 1 October 2020

The operating gold treatment plant includes crushing, grinding and Carbon in Leach (CIL) processing to produce gold dore at the Porcupine Flat gold processing plant.

The acquisition enables Kaiser to make the most out of the current strong gold price and bodes well with Kaiser’s mission to become a profitable gold miner.

The Board believes the acquisition will be a value addition to the Kaiser investors and shareholders. Together with the 2 highly prospective projects in the prolific Lachlan Fold Belt, the new stronger portfolio following the acquisition would position Kaiser better to make the best out of the current gold opportunity.

Read Here: Kaiser Reef Highlights Specimen Hill for the Upcoming maiden Drilling Program at Stuart Town

Kaiser Reef recently commenced the maiden drilling campaign at the Stuart Town project in New South Wales. The operating A1 Gold Mine holds substantial opportunity to expand further upon further drilling and geological modelling.

Between 12 August and 21 September 2020, Kaiser completed a due diligence on Centennial, the current holder of the project.

Kaiser intends to conduct an extensive drilling and mine scheduling program prior to expanding the production and expects to take advantage of prevailing strong Australian gold price. In a preliminary review Kaiser has identified prospectivity at the A1 gold mine.

Intricacies of the Acquisition Agreement

Following the agreement, Kaiser has been granted an exclusive and binding option to acquire the issue capital of Golden River Resources’ (GRR) held by the founding shareholders in consideration of a non-refundable $50,000 option fee. GRR is a special purpose vehicle entity which recently raised over $13.5 million in cash and acquired debt positions and finally acquired projects from Centennial administrators.

Kaiser Reef will issue 53,333,333 fully paid ordinary shares for a total consideration of $16,000,000 which will be issue on pro rata basis to the GRR shareholders on the basis of their stakes in GRR. Further, upon approval from the shareholders, the corporate advisor and certain brokers (for capital raisings) would be issued additional unlisted options and shares of Kaiser Reef.

The acquisition is subject to several conditions which would be required to be satisfied or waived off by 31 December 2020 such as shareholders’ approval, readmission of Kaiser on ASX and so on.

Capital Raising

In relation to the Acquisition, Kaiser Reef will be undertaking a capital raising program to raise a sum of $7.5M by issuing 25,000,000 Shares at an issue price of $0.30 per Share. A priority offer will be floated for the existing shareholders to participate in the fund raising while the additional funds would be raised. Strategic cornerstone investors reserve the right to subscribe up to shares worth $3.7 million.

The capital raising would provide funds for immediate exploration at Maldon and the A1 Gold Mine and securing enough working capital. The additional funds will be utilised to strengthen Kaiser’s $3.5 million cash reserves.

Kaiser has already been advised by the ASX on the change in nature and scale of Kaiser’s activities and would be required to re-comply to the Chapters 1 and 2 of the ASX Listing Rules.

Kaiser is preparing to call for a shareholders meeting in December 2020 (tentative), to evaluate and approve resolutions related to the acquisition.

Kaiser Reef last traded at $0.41 a share with a market capitalisation of $10.54 million.

(All financial information pertains to Australian currency unless stated otherwise.)