Theta Gold Mines recently adds initial fourth mine into the DFS

By Market Index
Fri 18 Feb 22, 11:27am (AEDT)
This article was written in collaboration with Theta Gold

Key Points

  • Based on initial favourable results, the Rietfontein Mine has been added to the DFS for the TGME Underground Project
  • Focus Minerals presents a foot-in-the-door back into Australia for Theta Gold
  • Theta Gold’s increased offer implies a value for each Focus share of $0.40

Trial mining completed at Frankfort, one of gold mining development company, Theta Gold Mines’ (ASX: TGM) range of prospective gold assets in a world-renowned South African gold mining region, recently demonstrate that the mechanised long-hole stoping mining method was suitable to mine the narrow gold reef system.

Frankfort, together with The Beta, and CDM mines are part of the company’s initial project - collectively referred to as the company’s TGME underground project – where 34 horizontal blast holes have been drilled at various lengths across the span of the trial mining block since September 2021.

Commenting on recent developments, Theta’s Chairman Bill Guy noted that successful trial mining at TGME has de-risked the event by confirming that long hole mechanised mining methods can effectively mine these large tabular shallow dipping (3-7 o) narrow gold reef systems. 

“The reef varies greatly in thickness from 0.24 metres to 6 metres. The ability to mine at 0.6m or narrower means reduced dilution and delivery of a higher ore grade to the plant,” noted Guy.

Rietfontein added to the TGME Underground DFS

In addition to the completion of the trial mining at the Frankfort Mine, nearby Rietfontein Mine PFS#2 during/post fourth quarter 2021 was another important milestone for the company. 

Based on initial favourable results, the Rietfontein Mine has been added to the DFS for the TGME Underground Project which is expected to be delivered during the second quarter of 2022.

This is expected to increase the production profile and mine life, along with further improving project economics. 

“Rietfontein high-grade ore was successfully mined up to 1945 using the shrinkage stoping method, producing 65,000 ounces of gold from 227,000 tons of ore, recovering more than 8 g/t,” adds Guy.

As a result, the TGME Underground Project now includes Rietfontein, plus the Beta, Frankfort and CDM mines.

Strong economics

Theta Gold continues to demonstrate strong project economics and is expected to commence production with an initial 60,000 ounces per annum. 

However, the company will continue to build up its mining reserves during the next year by progressing Rietfontein, and other mines and remains focused on its target of reaching 160,000 ounces per annum within five years from a multi-mine development program.

Management urges thumbs-up to final Focus Minerals bid

Given the nature of its exciting TGME underground project, the final bid to acquire Focus Minerals (ASX: FML) is by no means a showstopper for Theta Gold. However, given that Focus represents a similar resource [to existing assets], and presents a foot in the door back into Australia, management strongly urges [Focus] shareholders to accept the offer.

Focus currently operates exploration and development projects in two of Australia’s largest goldfields: the Laverton Gold Project and Coolgardie Gold Project.

Theta Gold has changed its off-market offer consideration from 2 new TGM shares for every 1 Focus share to 5 new TGM shares for every 2 Focus shares. 

This equates to 2.5 new Theta Gold shares for each Focus share. Theta Gold certifies that this enhanced offer consideration is now the best and last offer and will not be raised until a competing proposal is received.

Premium won’t last forever

The company’s revised takeover bid [for Focus] will remain open for acceptance until 7:00 pm (AEDT) on March 2, 2022, unless otherwise withdrawn.

Theta Gold’s increased offer implies a value for each Focus share of $0.40, which is a sizable 40.4% premium to the closing price of Focus shares on February 11, 2022.

Major shareholder (63.18%), Shandong Gold intends to reject the offer.

However, Theta Gold Director (Corporate/BD) Richie Yang reminds investors there is little to support the [Focus] underlying share price at abnormally high levels, should the offer be rejected. 

Yang reminds investors that during a takeover, the target price almost always trades up with more volume due to Premium offered by the Bidder.

“But once the Offer Period ends, generally the target side share price starts to drop in liquidity, and pricing itself as the market does not anticipate new Bidder's for the stock,” observes Yang.

“Hence, it usually re-adjusts down towards a price without the takeover premium.”


DISCLAIMER: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Theta Gold Mines Ltd was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice. Consider consulting a qualified financial adviser before making an investment decision.

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