NNO drops South African gold deal

Vancouver-based Northern Orion Explorations (NNO-T) has dropped a deal to acquire a 100% interest in Ditchburn Management, which holds a 12-month option to acquire up to a 90% stake in President Steyn Gold Mines, a South African mid-tier gold producer listed on the Johannesburg Stock Exchange.

Northern Orion says it is no longer pursuing the deal as PS Gold management introduced terms for the transaction that were, “beyond those of the signed letter agreement.”

Under the deal to acquire Ditchburn, Northern Orion would have issued between 93.6 million and 201 million shares, depending on the assets remaining in President Steyn Gold Mines at the time of closing. Orion is currently negotiating a separate deal for PS Gold’s operating assets.

Under the option deal, Orion would be able to acquire, for no more than 8 per share, up to 450 million ordinary shares, or 90% of PS Gold’s issued and outstanding shares.

PS Gold’s mining operations, some 190 km southwest of Johannesburg, are adjacent to other large operating mines and host five production shafts and significant infrastructure.

NNO says it is currently evaluating the possible acquisition of several other mining operations.

In late October, Thistle Mining (THT-T) announced plans to acquire five underground gold mines in the Free State of South Africa. Thistle will pay US$32 million in cash, plus a monthly royalty of US$8 per oz. gold for five years.

Among the assets are the company Mindserv and its wholly owned subsidiary, President Steyn Gold Mines (Free State), which operates the mines.

In the third quarter, President Steyn Gold Mines produced 45,597 oz. at a cash cost of US$213 per oz. The company realized a price of US$247.83 per oz. During the first nine months of 2001, production tallied to 134,743 oz. at an average cost of US$218 per oz.

Thistle has appointed Endeavour Financial in London to arrange US$25 million in bank financing, to be repaid over five years. The European division of Canaccord has been appointed to raise an additional US$10 million via a convertible loan note issue.