W. Australia + Latin America in Newest MergerWestern Australia Meets Latin America in Newest Gold Merger
By Jon A. Nones
14 Dec 2005 at 11:51 AM EST
St. LOUIS (ResourceInvestor.com) -- Junior miners Intrepid Minerals [TSX:IAU] and NuStar Mining [ASX:NMC] announced a merger yesterday, making them the next to couple up in at a rapidly consolidating gold mining dance. And with the gold price over $500/oz, this may be just the beginning.
“Not only is it a great day for gold, but a great day for mergers,” said Intrepid Minerals President and CEO Laurence Curtis in a conference call.
According to statements from both companies, this merger will unite the established Western Australian gold production with Latin American gold/silver exploration and development.
“We’re excited about this. The guys at Intrepid are a terrific bunch to be with,” said NuStar CEO Brett Lambert in the same conference call.
The combined entity will be named Intrepid Mines Limited.
The Terms
According to the agreement, NuStar ordinary shares will consolidate on a 12:1 basis, and shares of Intrepid Minerals will be exchanged for one share of the new Intrepid Mines. The transaction values the new company at C$79 million.
On completion of the merger, NuStar and Intrepid shareholders will own 62.6% and 37.4% of Intrepid Mines, respectively.
“Shareholders of both companies benefit,” said Colin Jackson, Chairman of NuStar Mining.
The Boards of Directors of each of NuStar and Intrepid have approved the merger, and each company has agreed not to solicit third party interest in alternative transactions.
The parties anticipate that the merger will be completed by the end of March 2006. The new Intrepid Mines will apply to be listed on the Toronto Stock Exchange and will apply for a name change and retain its listing on the ASX Limited.
The Benefits
The combined company will have high-grade resources approaching one million gold equivalent ounces and an expanded portfolio of advanced exploration projects in Australia and Latin America, according to the companies.
“The combination of these two companies creates an international exploration and development company with a portfolio of attractive precious metal assets, underpinned by current and growing production,” said Curtis in a company statement.
The merger will create a new intermediate producer with:
Projected production of 80,000 ounces of gold in 2006, increasing to 145,000 ounces of gold and 1,000,000 ounces of silver in 2007/2008.
862,600 ounces of gold equivalent in Indicated Resources and 104,400 ounces of gold equivalent in Inferred Resources.
Anticipated total cash cost of production less than $200 per ounce (after silver credits).
An advanced and growing stable of exploration projects in Latin America and the Pacific Rim of Fire.
“The new Intrepid brings together the project development and production expertise of NuStar and the exploration strength of Intrepid,” reiterated Curtis.
The Management
Senior Management of the new Intrepid Mines Limited will be as follows:
Laurence Curtis, President and Chief Executive Officer
Brett Lambert, Executive Director and Chief Operating Officer
Derek Humphry, Chief Financial Officer
William McGuinty, Vice-President, Exploration
NuStar Chairman, Colin Jackson will chair the new eight-member Board of Directors, comprised initially of four board members from Intrepid Minerals and four board members from NuStar Mining. Intrepid Chairman, Beth Kirkwood and Director Bruce Winfield will continue their valuable association as advisors to the company.
“The management of the new Intrepid Mines Limited comprises experienced mine operators and talented explorers and the combination of personnel from both companies makes for a first class management team,” said Intrepid Chairman Elizabeth Kirkwood the press release.
Intrepid
Intrepid Minerals’ primary assets consist of a series of advanced exploration projects in San Juan Province, Argentina. The company is also actively exploring for gold and silver in El Salvador and in joint venture with BHP Billiton [NYSE:BHP] in Canada.
The 100%-owned Casposo project in Argentina is the most advanced prospect. A definitive feasibility study is currently being conducted into the development of an open pit mine on the Kamila Zone, one of several mineralized structures identified at Casposo.
Indicated and inferred resources at Casposo currently stand at 2.3 million tonnes grading
4.44 g/t gold and 120.1 g/t silver for a total of 480,000 gold equivalent ounces based on a conversion rate of 60 ounces of silver to one ounce of gold.
Production is targeted to commence in 2007. Based on the scoping study, annual production will average 65,000 ounces of gold and 1,000,000 ounces of silver for five years. The Kamila Zone of the Casposo deposit remains open at depth.
“NuStar’s successful track record in project development and mining operations will assist in obtaining the required approvals and funding for the development of Casposo,” NuStar said in its statement.
NuStar
NuStar is the 100%-owner and operator of the Paulsens Gold Mine, located in the Ashburton Region of Western Australia. Paulsens is a high grade underground mine with a nameplate capacity of 250,000 tonnes per annum.
Gold production commenced in June 2005 and is forecast to average 80,000 ounces per year over an initial five-year mine life. The forecast is based on mineralization up to a depth of 300 metres, but the deposit has demonstrated mineral potential below this depth.
The company is also actively exploring a substantial regional tenement portfolio within trucking distance of the Paulsens operations.
“The combination of NuStar’s project development and operations management skills with Intrepid’s depth of expertise in mineral exploration will create a strong management team well equipped to further develop and grow the company,” the company said.
Share Price Activity
Yesterday, Intrepid shares closed at 61 cents, up 3 cents for the day on TSX. Today, shares closed out at 60 cents.
Shares in NuStar continue to trade right around 6 cents, closing at 5.5 cents today on ASX.