TORONTO, May 24, 2022 /CNW/ - Karora Resources Inc. (TSX: KRR) (OTCQX: KRRGF) ("Karora" or the "Corporation") is pleased to announce that it has entered into a binding agreement to acquire the operating, fully permitted 1.0 Mtpa Lakewood Mill gold processing facility located near Kalgoorlie, Western Australia, approximately 60 kilometres from the Beta Hunt Mine. The acquisition price of A$80 million is comprised of A$70 million in cash and A$10 million in Karora shares. Karora successfully tolled Beta Hunt material through the Lakewood mill in Q1 2022, achieving 94% Au recovery.
The transaction is subject to, among other conditions, satisfactory completion by Karora of its due diligence, Toronto Stock Exchange approval and Australian regulatory approval. Closing will occur three business days following the satisfaction or waiver of such conditions. The A$10 million in Karora share consideration will be satisfied by the issuance of shares based on a 20-day volume weighted average share price on the TSX and applicable currency exchange rates. Karora has paid a A$500,000 deposit to the seller to be deducted from the cash portion of the purchase price due at closing.
Paul Andre Huet, Chairman & CEO, commented: "Closing the acquisition of the Lakewood Mill would be a transformational step forward for Karora, similar to the Higginsville mill acquisition in June 2019. Not only is the Lakewood mill closer to Beta Hunt than Higginsville, but the acquisition would provide several immediate strategic and operating benefits to Karora.
First and foremost, it is anticipated that the acquisition would immediately de-risk our growth plan to increase gold production to between 185,000 and 205,000 ounces by 2024, by eliminating the procurement, schedule and construction risks associated with a major expansion of Karora's Higginsville Mill. In the current highly inflationary capital environment, which is negatively impacting many of our peers, we expect that this acquisition would take that risk completely off the table. We would also reduce our reliance and exposure to a single milling solution, further de-risking our future growth.
Secondly, upon closing, the addition of a second mill is anticipated to immediately increase our nominal processing capacity by over 60% from 1.6 Mtpa to approximately 2.6 Mtpa. In addition, a second ball mill is already in place at the Lakewood site that is expected to increase capacity to 1.2 Mtpa once commissioned. In the first quarter, we toll milled 60,000 tonnes of Beta Hunt material through the Lakewood mill yielding a 94% recovery rate. This provides us with a high degree of comfort regarding the metallurgical performance of our material through this mill.
The addition of a second operating mill brings with it significant potential toll milling capacity - we intend to fill short-term spare capacity through toll milling arrangements at one or both of the Higginsville Mill and Lakewood Mill until the Beta Hunt expansion is completed. Upon completion of acquisition of the Lakewood Mill, we will begin to evaluate mill optimization opportunities to maximize the efficiencies at both mills as a single, significantly de-risked business.
The expansion to double production from Beta Hunt to 2 Mtpa is well underway and, as previously announced this morning, the development of the second decline is tracking ahead of schedule and on budget.
Lastly, and certainly not least, the future potential to expand the Higginsville mill to 2.5 Mtpa on its own remains, should we find the requisite feed sources and once the current inflationary environment has passed. With this acquisition, we expect that our milling bottleneck days will be well and truly in the rear-view mirror. I am thrilled to be able to announce this transaction to our shareholders."
About Karora Resources
Karora is focused on increasing gold production to a targeted range of 185,000-205,000 ounces by 2024 at its integrated Beta Hunt Gold Mine and Higginsville Gold Operations ("HGO") in Western Australia. The Higginsville treatment facility is a low-cost 1.6 Mtpa processing plant, expanding to a planned 2.5 Mtpa by 2024, which is fed at capacity from Karora's underground Beta Hunt mine and Higginsville mines. At Beta Hunt, a robust gold Mineral Resource and Reserve are hosted in multiple gold shears, with gold intersections along a 4 km strike length remaining open in multiple directions. HGO has a substantial Mineral gold Resource and Reserve and prospective land package totaling approximately 1,900 square kilometers. The Company also owns the high grade Spargos Reward project, which came into production in 2021. Karora has a strong Board and management team focused on delivering shareholder value and responsible mining, as demonstrated by Karora's commitment to reducing emissions across its operations. Karora's common shares trade on the TSX under the symbol KRR and also trade on the OTCQX market under the symbol KRRGF.
AND
Karora Resources Announces C$50 Million Bought Deal Financing.
TORONTO, May 24, 2022 – Karora Resources Inc. (TSX:KRR; OTCQX:KRRGF) ("Karora" or the “Corporation") is pleased to announce that it has entered into an agreement with Haywood Securities Inc. (“Haywood”), to act as co-lead underwriter and sole bookrunner, and Cormark Securities Inc. (together with Haywood, the “Co-Lead Underwriters”), to act as co-lead underwriter, on their own behalf and on behalf of a syndicate of underwriters (together with the Co-Lead Underwriters, the “Underwriters”), pursuant to which the Underwriters have agreed to purchase, on a bought deal basis, 10,417,000 common shares in the capital of the Corporation (the “Common Shares”) at a price of C$4.80 per Common Share (the “Issue Price”) for gross proceeds to the Corporation of C$50,001,600 (the “Offering”).
In addition, the Corporation has agreed to grant the Underwriters an option to purchase up to an additional 15% of the number of Common shares sold under the Offering at a price per Common Share equal to the Issue Price, on the same terms and conditions as the Offering, exercisable at any time, in whole or in part, until the date that is 30 days following the closing of the Offering.
The Corporation intends to use the net proceeds received from the Offering to fund a portion of the cash consideration due at a closing of the Lakewood Mill acquisition as further described in the Corporation’s news release dated today (which transaction is subject to the satisfactory completion by the Corporation of its due diligence and other applicable closing conditions), advancement of the Corporation's nickel exploration and development program at Beta Hunt, and for working capital and general corporate purposes.
The Common Shares will be offered by way of a short form prospectus to be filed in all provinces of Canada (other than Quebec). The Common Shares will also be sold to U.S. buyers on a private placement basis pursuant to an exemption from the registration requirements in Rule 144A of the United States Securities Act of 1933, as amended, and other jurisdictions outside of Canada provided that no prospectus filing or comparable obligation arises.
The Offering is scheduled to close on or about June 15, 2022 and is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and other approvals including the approval of the Toronto Stock Exchange and the securities regulatory authorities.
The securities offered in the Offering have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) or any U.S. state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, United States persons absent registration or any applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
About Karora Resources |
