mungana prospectus lodged, page-14

New gold-focused, listed miner to be formed from Kagara spin-off

By: Esmarie Swanepoel
16th April 2010
Updated 3 hours ago
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PERTH (miningweekly.com) - ASX-listed Kagara announced plans for the spin-off of its Queensland gold assets on Friday, following the lodgment of an initial public offering (IPO) prospectus for Mungana Goldmines.

Mungana, which was formed last year to house and develop the gold interests of the Kagara Group in the Chillagoe region of North Queensland, aims to raise up to A$76-million through an issue of 80-million shares at a price of A$0,95 per share.

The IPO proceeds will reportedly be used to undertake mining studies and a definition drilling programme at the Mungana and Red Dome gold deposits culminating in a bankable feasibility study (BFS) to assess the optimal development strategy for these deposits.

The company is targeting a resource capable of sustaining production of 150 000 oz/y of gold and 60 000 t/y of copper concentrate.

The offer will be open to the public together with a priority allocation of just over 50% of shares to be offered to existing Kagara shareholders on the basis of one Mungana share for every 16 Kagara shares held at the record date of April 27.

Kagara will retain a 49% stake in Mungana, while its major shareholder China?s Guangdong Foreign Trade Group will acquire 16% in Mungana by subscribing for shares in the IPO.

Executive chairperson Kim Robinson said that the launch of the Mungana IPO marked a major milestone for the group, bringing to fruition its strategy to accelerate the development of the assets towards production within a targeted 24-month timeframe.

?The listing of Mungana Goldmines will realise our long-held vision for these quality gold and copper assets in North Queensland by housing them within a separate listed vehicle with a dedicated focus, corporate structure and commitment to unlock their value,? Robinson enthused, describing the IPO as one of the largest and most significant for Australia?s gold sector in recent years

?This is a fantastic opportunity for our shareholders and others to participate in the growth and development of a major new Australian gold company.?

The IPO comprises a retail offer, which opens on April 27 and closes on May 18, and an institutional offer, which opens on May 21, and closes on May 24. Kagara said that the retail offer might be closed earlier without notice.

After listing, Mungana will have 157-million shares in issue, giving it a market capitalisation at the issue price of A$149,2-million.

Mungana?s key assets are the Mungana and Red Dome gold deposits, located in the Chillagoe region of North Queensland, which have combined measured, indicated and inferred resources totalling 1,85-million ounces of gold, 180 000 t of copper and 13-million ounces of silver.

Mungana will have access to existing mine infrastructure, including underground decline development at Mungana, on which Kagara has expended A$130-million.

The resource base was Joint Ore Reserve Committee-compliant and included exploration prospects, Kagara said.

The exploration programme will involve over 100 000 m of drilling over the next 12 to 18 months at a cost of approximately A$30-million and will include in-fill drilling of known resources for conversion into reserves as well as geotechnical and metallurgical drilling for the BFS and exploration of a host of regional targets.

Under a gold rights agreement with Kagara, Mungana will have access to Kagara?s operational facilities in the Chillagoe region, including its regional expertise and geological database, which dates back to the 1980s.

On completion of the IPO, Mungana will also make a payment of up to A$26-million to Kagara, depending on subscription levels, to reimburse historical costs incurred in the development of the Mungana gold project.

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http://www.miningweekly.com/article/new-gold-focused-listed-miner-to-be-formed-from-kagara-spin-off-2010-04-16