Gold miner shows mettle in £73m West African deal
Mayfair-based gold miner Avocet Mining launched a friendly £73 million takeover bid today for Norwegian-listed Wega Mining, which will double its production and prospects almost immediately.
Wega is developing what should be by this autumn one of the largest gold mines in Burkina Faso, West Africa. The Inata Gold Project is expected to produce 120,000 ounces of gold a year over its expected seven-year life.
Wega has another 29 exploration licences in the region.
Jonathan Henry, chief executive of Avocet, said that his company had won Wega in a hotly contested auction. "This deal takes us from being a South-east Asia-focused gold miner to a mid-tier, profitable gold company with significant upside for future growth," he said.
Today's deal had been struck at "around $800 an ounce", he said — some 10% lower than the current gold price of $879 an ounce.
In a complicated three-tier takeover, Avocet is injecting a total of $30 million (£20 million) of fresh capital into Wega and paying $73.8 million for its shares. It has already won acceptances from holders of 76% of Wega shares that cannot be revoked even if a higher competing bid comes in.
The largest seller is Jan Haudemann-Anderson, a well-known Norwegian investor and entrepreneur, who has made a small fortune backing natural resources companies.
Avocet's Henry said that West Africa was now the second fastest-growing gold area after China. Burkina Faso, he said, had become one of the world's most "do-able" countries for gold mining. He added: "It's all well and good prospecting and finding gold, but can you get it out of the ground? Burkina Faso is in the same time zone as London and only a five-hour flight from Paris.
"Several of our existing team speak French already. We don't see this deal stretching us geographically or managerially."
Avocet has two mines in Indonesia and Malaysia. By 2011 it should be producing 180,000 ounces of gold a year.
