It seems Empire and “ex Gutnick era “ Echo Resources have more in common than names starting with ‘E’ and an interest in gold .
They share the focus of Dr Michael Rouane.
Dr Rouane now own 7.63% of Empire after investing more than $500,000 since the end of June *.
Jarrod Lucas Echo Resources chief Simon Coxhell and Metaliko executive director Michael Ruane. Picture: Ian Munro
Echo Resources boss Simon Coxhell says it will cost in the vicinity of $5 million to $10 million to restart the Bronzewing processing plant, the prize in the gold miner’s $38.9 million takeover of Metaliko Resources.
This year’s resurgence by the precious metal provided the perfect platform for the tie-up, which seemed inevitable, given both companies run out of the same Nedlands office and hold adjoining tenements in one of Australia’s richest gold provinces.
Metaliko shareholders will receive one new Echo share for every 2.5 shares held, valuing the offer at $38.9 million, or 8.8¢ per Metaliko share.
Post-merger, Echo will have combined mineral resources of 847,544 ounces spread across more than 1600sqkm in the Yandal belt, between the operating Jundee and Darlot gold mines.
The Metaliko board has unanimously recommended the merger in the absence of a superior offer, and 60.36 per cent of Metaliko shareholders have accepted.
Metaliko’s executive director Michael Ruane, who holds a 30 per cent stake in Metaliko and 12 per cent of Echo, will emerge with between 15 to 20 per cent of the new entity.
Bronzewing, a remnant of “Diamond” Joe Gutnick’s era of dominance over the WA gold mining scene, has been dormant since Navigator Resources collapsed in March 2013.
Mr Coxell said the mill was in “pretty good condition” but previous owners Navigator had “dropped the ball on maintenance”.
“We’re going to put a lot of horsepower into costing the refurbishment,” he said.
“When we’ve reached the point of turning it back on, we could draw down on the gold we’ve got in the ground for a loan. We don’t necessarily have to go back to the market to get it done.”
The beefed-up Echo wants to bring its Julius project — touted as one of the richest gold discoveries in the northern Goldfields for two decades — into production by the middle of next year.
Mr Coxell said a bankable feasibility study was due by December after a scoping study this year put a $2.9 million price tag on the development of a shallow open-pit operation at Julius, 75km north of Bronzewing.
Yesterday’s merger announcement continues a turnaround by Echo, which was going nowhere eight months ago until Dr Ruane ousted founding managing director Ernst Kohler.
The board coup was anything but smooth and required a locksmith to gain access to Echo’s office.
By April, Echo declared a maiden resource of 226,257oz f or Julius to underline a decade of hype without any evidence.
Dr Ruane said the merger could create “Australia’s next mid-tier gold miner”, adding there had been little dedicated exploration since 2003 at Metaliko’s tenements.
“We have already seen other companies generate significant shareholder wealth through reinvigorating existing assets in the Yandal belt and elsewhere in WA and we see a similar opportunity,” he said.
Shares in Echo and Metaliko both hit 12-month highs yesterday before closing at 26¢ and 9.4¢ respectively.
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