STRUGGLING gold play Apex Minerals has received support from the Andrew Forrest-led The Metal Group, with the latter agreeing to invest up to $18 million in Apex and provide advice and access to its extensive contact network. The investment will give The Metal Group a 20 per cent stake in the troubled miner.
Previous chief executive officer of iron ore major Fortescue Metals Group, Mr Forrest recently loaned Apex a $4 million short-term debt facility via The Metal Group’s subsidiary AMNL Financing.
Apex has been struggling to maintain profitable operations at its flagship Wiluna gold mine 1000km northeast of Perth. During the December 2011 quarter, Apex received an average $1667 per ounce of gold, however its cash operating costs exceeded that fi gure, sitting at $1696/oz.
A little more than 11,263oz of gold was mined during the December quarter, with Apex managing to sell 9200oz. After providing the $4 million to Apex, The Metals Group conducted due diligence on the gold producer and its assets which, in turn, led to the $18 million strategic investment agreement.
“We are pleased to have secured the strategic and financial support of Andrew Forrest and The Metal Group as we undertake the task of restoring Wiluna’s profitability for the benefit of Apex shareholders,” Apex executive chairman Eduard Eshuys said. “We believe the strategic advice about the company’s future direction and the ability to utilise the network of The Metal Group, which
has achieved a strong track record of building value in the minerals industry, will bring real benefits to Apex shareholders.”
According to the terms of the agreement, The Metal Group will assist Apex with its investor marketing and finance activities for three years starting from the date the agreement is officially executed. The Metal Group has access to a global network of brokers, institutional investors, debt providersand equity capital providers, and Apex will also entertain advice from The Metal Group on possible joint ventures, mergers and acquisitions and corporate initiatives.
In return for the network connections and advice, The Metal Group will receive 55.3 million unlisted options exercisable at $0.30 a share at any time within three years of the date of issue. The option package’s exercise price is a 50 per cent premium on the $0.20 per share issue price of the recently completed $22.2 million rights issue. The agreement also has the condition that
The Metal Group has the right to appoint a nominee to the Apex board at a point when the group holds more than 5 per cent of Apex. Drummond Gold has been integral to Apex’s rights issue and turnaround, with Drummond facilitating and underwriting a portion of the issue. For facilitating the rights issue, Apex will pay Drummond $350,000. Drummond has also sub-underwritten the
rights issue for $250,000 and acquired 125 million shares at a $0.02 per share issue price. The strategic agreement with The Metal nGroup and planned option packages remains subject to unconditional shareholder approval. Apex will seek approval to grant Drummond an additional 35.3 million, and Mr Eshuys 9.2 million unlisted options. Upon gaining shareholder consent, Apex’s fully diluted capital structure should reflect: The Metal Group 20 per cent, Drummond Gold 15 per cent and Mr Eshuys 5 per cent.
By Lorna Seatter