Orion to raise A$8m to help fund Agama acquisition

PERTH (miningweekly.com) – ASX-listed Orion Gold is hoping to raise A$8-million through the issue of convertible notes to sophisticated and professional investors to enable it to complete the buyout of Agama Exploration & Mining.

The junior company on Tuesday said it would issue up to 307.6-million convertible notes, with a face value of 2.6c each. The convertible notes will have a maturity date of 24 months and an interest rate of 12% a year.

Noteholders could elect to convert part or all of their notes at any time prior to the maturity date, provided the face value of the notes was less than A$250 000.

The capital raise is subject to shareholder and regulatory approvals.

The funds raised will assist Orion in completing the purchase of Agama, which holds an effective 73.33% interest in the prospecting rights over the historical Prieska copper mine in South Africa.

Orion will acquire Agama for around A$5.3-million, of which A$3.15-million will be payable in cash and A$2.15-million in shares. The acquisition is subject to a number of conditions, including Orion providing proof of financial capacity to complete the transaction, the issue of shares and unlisted options to the vendors being approved by Orion shareholders, and Orion providing finance for Agama to settle all of the company’s shareholder loans, which amount to around A$3.23-million.

With the satisfaction of these conditions, Orion is hoping to complete the acquisition by March 15.

Meanwhile, Orion on Tuesday also said it had received regulatory permission to access the underground workings at the Prieska project, which would allow for a detailed assessment of the current state of the shaft and other underground infrastructure, as well as to conduct drilling and sample extraction for metallurgical testwork.

Sampling of the water in the shaft will also be carried out to confirm its nature and suitability for process water, and will allow for detailed planning of dewatering, and application for water use licences as part of a future application for a mining right.

The Prieska project historically produced some 430 000 t of copper and some one-million tonnes of zinc between 1971 and 1991, at which time it was closed.