Metal Tiger has added to its growing portfolio of global mineral assets through the acquisition of a 9.4% stake in Indian gold specialist Kolar Gold Limited.
Metal Tiger is investing £200,000 cash for 18.2 million new shares and will also receive a similar number of warrants exercisable at double the price at any time within 30 months of the placing shares being admitted to trading.
It also has entered into an option agreement for a fee of US$25,000 to acquire a further 9 million existing Kolar Gold shares from its current largest shareholder, at a price of 3.5p per share exercisable on or before March 7, 2017.
Metal Tiger’s former chief executive Cameron Parry will step down from its board to become the CEO of Kolar Gold. Luke Cairns will join as Kolar’s other executive director. The new executives will launch an operational review of the business as their first task.
Metal Tiger’s CEO Paul Johnson said the investment was at a modest valuation that reflected recent resource sector apathy in the markets. “We are hugely excited by the opportunity afforded by our investment and Cameron’s involvement in Kolar Gold.”
Kolar Gold was established in 1997 to secure and revive the Kolar Gold Fields operated by Bharat Gold Mines Limited (BGML) in joint venture with the local workforce and community.
As the timing of any decision regarding the sale of the Kolar Gold Fields was uncertain, in order to diversify the company’s strategy, management approached Geomysore Services India (GMSI) in 2009 to form a strategic partnership to develop the Kolar Gold Projects which surround and are adjacent to Kolar Gold Fields.
These projects have been divided geographically into three tenement groups, being the North, South and East Kolar blocks and straddle the states of Andra Pradesh, Tamil Nadu and Karnataka.
Mining at Kolar Gold Fields operated for more than 120 years and produced approximately 25 million ounces of gold at an average grade of 15.9 grams/tonne. The mine became uneconomic in the late 1990s due to poor management, exploration, underinvestment and the focus on labour-intensive deep underground mining leading to the abandonment of mining operations in 2001.