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(Sharecast News) - Metals One shares were rising on Monday morning, after it said its associate Lions Bay Resources had made an offer for the assets of the Vantage Goldfields Group in a potential step towards building a vertically-integrated gold business in South Africa.
The AIM-traded critical and precious metals explorer and developer did caution, however, that the proposal remained conditional.
It said Lions Bay Capital, in which it holds a 19.1% stake, announced on 24 December that its 47.39%-owned associate, Lions Bay Resources, had submitted an offer for all of Vantage's assets.
Metals One also holds 5% of Lions Bay Resources alongside $1.8m of convertible loan notes, which, if fully advanced and converted, would give it a shareholding of at least 30% on a fully-diluted basis.
Vantage was placed into business rescue following a crown pillar collapse at the Lily mine in 2016 and comprises mining leases in South Africa's Barberton region with a historical gold resource inventory of 4.5 million ounces, a central metallurgical complex and extensive underground development.
Lions Bay Resources is managed by the Salamander Mining Group, led by former Harmony Gold chief executive Graham Briggs, alongside senior industry executives Lloyd Birrell and Deon Robbertze.
Under the proposal, Lions Bay Resources offered CAD 46.5m (25.14m) for the Vantage assets, including an initial cash payment of CAD 12.7m, a second payment of CAD 18.8m to be satisfied through the issue of shares, and a final payment of CAD 15m payable as a royalty on gold revenue.
Part of the second payment would be made through the issue of Lions Bay Capital shares at a deemed price of 50 Canadian cents per share, with the proportion determined by Lions Bay Capital's ownership in Lions Bay Resources, which was not expected to exceed 50%.
The transaction would be subject to regulatory approvals, including expert reports, stock exchange consent and shareholder meetings.
Lions Bay Capital said the acquisition could provide feed for Lions Bay Resources' planned gold roaster project.
The company said it had an option to acquire a cogeneration power plant that it intended to modify to treat complex concentrates similar to those historically produced by Vantage, with a competent person's report expected early in the new year and the option extended to 31 January.
"Lions Bay Resources' bid for Vantage marks an exciting step in its strategy to create a vertically integrated gold business in South Africa," said Metals One managing director Daniel Maling.
"As a stakeholder in both Lions Bay entities, Metals One could create significant value for its shareholders from these opportunities."
At 1121 GMT, shares in Metals One were up 7% at 2.1p.
Reporting by Josh White for Sharecast.com.