Beaconsfield Gold (BCD) has formed a strategic relationship with Malaysia Smelting Corporation Berhad (MSC) with the intention of accelerating the growth of Beaconsfield Gold through exploration and acquisition. The two companies have signed a Subscription Agreement for a placement of 70 million BCD shares to MSC at a price of A$0.28 per share, representing a premium to the recent trading price for BCD shares. The placement will raise a total of A$19.6 million with the shares to be issued to MSC. Upon completion of this placement, MSC will hold 18.9% of Beaconsfield’s issued capital.
Malaysian-based MSC Group is one of the world’s largest integrated producers of tin metal and tin-based products with interests in mining, smelting and downstream manufacturing. It has mining and smelting operations in Malaysia and Indonesia and recently acquired a strategic interest in Asian Mineral Resources which is developing a nickel project in Vietnam. MSC is listed on the main board of Bursa Malaysia Securities (Kuala Lumpur Stock Exchange) and is a 73.16% subsidiary of The Straits Trading Co (STC), a Singapore Stock Exchange listed company. STC is focused on hotel development and management, financial investments, property development and investments, and metals and mineral resources. It is currently capitalised at around $1.6 billion.
MSC was an associate of both Malaysia Mining Corporation Berhad (MMC) and STC until September 2006 when MMC sold its stake in MSC to STC. MMC previously was a large (30% plus), long term cornerstone investor of Plutonic Resources, a major Australian gold producer that merged with Homestake Mining in 1998 in a transaction valuing Plutonic at about A$1 billion. MMC’s investment in Plutonic proved very rewarding.
Beaconsfield Gold’s Chairman, Denis Clarke, who was formerly General Manager at Plutonic, commented: “Plutonic achieved remarkable growth during the period when MMC was its major shareholder. I am confident, based on my experience with MMC, that Beaconsfield Gold and MSC will work well together to also achieve significant growth. I very much welcome the association with MSC.”
On subscription, the Board of Beaconsfield Gold will be strengthened with the addition of Dato’ Dr Mohd Ajib Anuar, the Group Chief Executive Officer and Executive Director of MSC, and Choo Mun Keong who heads strategic planning and investments for the Group. Dato’ Dr Mohd Ajib Anuar holds the professional qualification of the Association of Chartered Certified Accountants, United Kingdom and has strong connections with the Singaporean and Malaysian financial communities. Choo Mun Keong is an experienced geologist with considerable expertise in international exploration and resources investment.
Dato’ Dr Mohd Ajib Anuar commented: “This investment is part of MSC Group’s strategic expansion into the mineral and metal resource sectors. The Group is confident that gold is an attractive long term growth business and Beaconsfield Gold represents an excellent entry point for us.”
MSC and Beaconsfield Gold have agreed to work together to build on the production and exploration activities currently conducted by the Beaconsfield Gold Group. With the successful recommissioning of the Beaconsfield mine and the support of MSC, the company is now well positioned for growth. Funding is immediately available for accelerated, sustained exploration and funding capability for new projects and synergistic acquisitions is significantly enhanced.
Beaconsfield Gold and its subsidiaries primarily used debt facilities of A$15 million provided by the Commonwealth Bank of Australia (CBA) in November 2007 to close out all remaining Group gold hedging commitments. As the gold price has continued to rise strongly since November, the closeout of the hedging has proven to be well justified.
The Beaconsfield mine is now restored as a significant gold producer with enhanced reserves as at 30 November 2007 and a drill program commencing during 2008 to extend Tasmania Reef reserves at depth. An aggressive regional exploration program has already commenced at Beaconsfield targeting reefs north and south of the Tasmania Reef and other exploration opportunities to exploit spare capacity available in the Beaconsfield ore treatment plant are also being considered.
Clarke commented: “Beaconsfield Gold has never been in better shape. The transformation from being the holder of a minority, non-operating interest in the Beaconsfield mine into being a very attractive mid-tier gold producer in its own right is now complete. The company has achieved ownership of an effective 100% interest in the mine and has successfully completed recommissioning of all mining operations, including production from the high grade Western Zone of the mine. I believe also that the MSC investment is a sign of confidence not only in the company’s operations but also in its exploration opportunities. Importantly, the introduction of MSC as a cornerstone investor means the company now has no net debt as well as no gold hedging commitments. My experience as an executive at Plutonic Resources during its growth phase gives me confidence that the future will be rewarding for both our existing shareholders and our new cornerstone Malaysian investor. With a clean balance sheet, Beaconsfield Gold is now well placed to consider both organic and acquisitive growth opportunities.”
