AngloGold buys 15% stake in Australia’s Orinoco

PERTH (miningweekly.com) – Gold hopeful Orinoco has struck a strategic partnership with South African gold miner AngloGold Ashanti, under which it would receive a A$5.9-million capital injection in return for AngloGold taking a 15% stake in Orinoco.

AngloGold will subscribe for more than 85.1-million shares in Orinoco, priced at 7c each, along with one free option for each share issued, exercisable at A$11c each on or before the end of January 2020.

The terms offered to AngloGold were similar to those of a current four-for-seven renounceable entitlement offer open to shareholders.

On completion of the corporate investment, AngloGold will have the right to appoint one director to the Orinoco board and to retain that nominee director for as long as the company’s voting power remains above 10% of Orinoco’s issued share capital.

The two companies have also entered into a regional exploration joint venture (JV) over Orinoco’s Faina Goldfield project, encompassing the tenement package around the Cascavel gold mine, in Brazil.

AngoGold will spend up to $9.5-million over a three-year period to earn a 70% interest in the tenement area and will have the right to negotiate an earn-in or acquisition of up to 50% of the Cascavel gold mine.

Orinoco MD Mark Papendieck said on Tuesday that the wide-ranging agreement with AngloGold represented a strong endorsement from one of the world’s largest and most successful gold mining companies.

“This represents a significant vote of confidence in the quality and potential of our tenement position in the Faina greenstone belt and is particularly satisfying given AngloGold’s extensive experience exploring and operating in the local area.”

Papendieck further noted that AngloGold’s cornerstone investment provided the company with a significant cash injection to help advance the restart of operations at Cascavel, which remains the company’s primary focus.

“We are now close to finalising a detailed plan to resume operations and we remain very focused on recommencing mining at Cascavel in the near term.”

Orinoco in October 2016 suspended operations at Cascavel after the mine failed to meet expectations. An independent technical review has now advised a restart of the mine, concluding that the mine and plant issues experienced during the start-up were common commissioning problems that could be easily fixed.

The review found that gold recoveries at Cascavel were most likely impacted by the insufficient liberation of gold from ore and from operator error during the first two months of operation at the plant.