Chifeng Gold intends to acquire 62% of the shares of Venus Resources for about 1.862 billion yuan to expand the international layout space

Chifeng Gold (600988) announced on the evening of November 1 that the Company intends to acquire 62% of all issued and circulating ordinary shares of Venus Resources in cash at a price of US$3.91 per share through its wholly-owned subsidiary, Chijin Hong Kong, with a transaction consideration of about US$291 million, or about RMB1.862 billion, and Chifeng Gold provides a parent company guarantee guarantee for chijin Hong Kong for this transaction. The Company's sources of funds for the implementation of the Transaction are its own and self-financing.

The consideration for the transaction was $3.91 per share, representing a premium of 24.13% over the closing price of $3.15 per share of Venus Resources' common stock listed on the New York Stock Exchange on the trading day prior to the signing of the Arrangement Agreement.

Venus Resources is an international gold exploration and production enterprise, and its core asset is the Wassa gold mine in Ghana. As of June 30, 2021, Venus Resources had issued a total of 116 million ordinary shares, 33% held by the single majority shareholder, LA MANCHA, and the remaining shares were held by institutional investors and public shareholders, and the company was listed on the New York Stock Exchange, the Toronto Stock Exchange and the Ghana Stock Exchange.

The core asset of Venus Resources is the Wassa Gold Mine in Ghana, which currently holds 90% of its shares, with the other 10% held by the Ghanaian government. The Wassa Gold Mine, a large, young gold-producing mine located in the Ashanti Gold Belt, Ghana's largest gold-forming belt, began open-pit production in 2005 and underground production began on 1 January 2017. According to the target company's NI43-101 standard technical report, as of December 31, 2020, the mine had a total resource of 11.72 million ounces (364.8 tons) at an average grade of 3.53 g/t, of which the proven+ controlled resource was 3.537 million ounces (110 tons).

The Wassa Mine was granted a mining lease in September 1992 for a period of 30 years and will expire in September 2022. The Wassa lease stipulates a mining area of 5289 hectares, and the boundary application is re-applied to meet the requirements of the local power grid of the Mining Commission, and the total area of mining is expected to increase to 6496 hectares. As of fiscal 2020, the Wassa mine has produced a cumulative 2.4 million ounces of gold.

Chifeng Gold's main business is gold and non-ferrous metal mining and sorting business, mainly through its subsidiaries. Subsidiaries Geelong Mining, Huatai Mining and Wulong Mining are engaged in gold mining and dressing business; subsidiary Han fung Mining is engaged in zinc, lead, copper and molybdenum mining and dressing business; vientiane Mining in Laos is currently mainly engaged in gold and copper mining and smelting business. In addition, Guangyuan Technology, a holding subsidiary of the company, belongs to the comprehensive recycling industry of resources and is engaged in the disposal of waste electrical and electronic products.

Chifeng Gold has established a "gold-based" development strategy and adhered to the development strategy of both internal reserve increase and epitaxial expansion. According to e's previous report on September 15, on September 15, Australian-listed mining company Metals Tech Limited. (MTC) announced that it had signed a strategic investment agreement with a subsidiary of Chifeng Gold (600988), and Chifeng Gold would invest 2 million Australian dollars and subscribe for more than 5.88 million MTC shares at a price of 0.34 Australian dollars per share. MTC's main asset is the Stureck Gold Mine in Slovakia, where the funds raised from the share offering were used for resource drilling for the Sturec Gold Project. It is worth noting that MTC is planning to split its lithium mining assets into Winsome Resources for a separate listing.

Under the background of the increasing scarcity of gold resource reserves and the strong demand for gold, Chifeng Gold has obtained control of the Wassa gold mine in Ghana through the equity of the target of this acquisition, and the company can quickly obtain high-quality resources and improve gold resource reserves.

It is worth mentioning that Chifeng Gold completed the acquisition of overseas mergers and acquisitions at the Sepon copper-gold mine in Laos in 2018, taking the first step in internationalization. If the acquisition of 62% of the shares of Venus Resources is completed this time, Chifeng Gold will take the opportunity to enter West Africa, an important international gold-producing region.

According to public information, West Africa has rich gold resource reserves and a good and stable mining regulatory environment, and a number of internationally renowned mining companies own and operate large gold mines in Ghana, and Ghana has become the largest gold producer in Africa. Therefore, this merger will further expand chifeng gold's international layout space and lay a solid foundation for the company's sustainable development.

Chifeng Gold said that Wassa Gold Mine is a production mine with large output and resource scale, high comprehensive recovery rate of processing and smelting, low operating costs, and is in a good life cycle and good cash flow. It is expected to produce more than 4.5 tonnes of gold in 2022. According to the PEA (Preliminary Economic Survey) report released by the target company, the mine will have a significant increase in gold production after the capacity increase and transformation. The company will make full use of the gold mining technology and management experience accumulated over the years to dig deep into the resource potential in the future operation of the Wassa Mine, further reduce costs, improve operating income, and enhance the company's ability to continue to operate and the scale of profitability.