Highland Park boosts Keegan’s credibility

A group of the original founders and former executives of LionOre Mining are throwing their weight behind Keegan Resources (KGN-T, KGN-X), with a strategic alliance and private placement that further de-risks the junior’s Esaase gold project in Ghana.

The former executives at LionOre — which was acquired for $6.3 billion in 2007 by Norilsk Nickel — are key investors in Johannesburg-based Highland Park and behind the group’s strategic investment in Keegan, which would add $32.5 million to Keegan’s $186-million-strong treasury through an equity financing of 9.4 million units at $3.44 per unit. Each unit includes a warrant exercisable at $4 for two years.

Perhaps more important than the financing, however, is the endorsement and new management that Highland Park’s strategic investment brings to the junior. Peter Breese, previously LionOre’s chief operating officer, will take the helm at Keegan as its new president and CEO, while Colin Steyn — LionOre’s president and CEO from 1999, and current chairman of Coalspur Mines (CPT-T) —will join Keegan’s board.

Both executives have decades of experience ranging from project development to operations management, and are familiar with working in Africa. Breese has also held a number of senior executive positions, including being CEO of Mantra Resources before its US$1-billion acquisition by ARMZ Uranium Holding, the 51.4% shareholder in Uranium One (UUU-T). He was CEO of Norilsk Nickel, and held management and board positions with Impala Platinum Holdings (LPLA-L) in South Africa, Mimosa Mining and Zimasco in Zimbabwe, and BCL in Botswana.

Before Steyn joined LionOre as president and CEO, he served as executive director of Rio Tinto’s metallurgical operations in Zimbabwe. During his time as CEO at LionOre, the company grew from a market capitalization of US$100 million to over US$6 billion.  

Keegan’s new chief operating officer, meanwhile, will be Tony Devlin, who has operated and managed projects in Africa for more than a quarter of a century. Devlin recently served as a managing director at Mantra Tanzania, and prior to that held the same role at Williamson Diamonds in Tanzania. He also undertook a number of executive management positions with Anglo American (AAUK-Q, AAL-L), including CEO of Zimbabwe Alloys.

“This gives Keegan a proven development and operating team to move its Esaase project in Ghana forward, and some new faces to market the story,” Dave Kaiser, senior investment advisor at Canaccord Wealth Management in Toronto, writes of the deal. “LionOre was well respected. It was primarily nickel, but they also had the Thunderbox gold mine in Australia that they operated.”

For its part, Highland Park was behind the development and strategic direction of Mantra Resources into a leading uranium explorer and developer prior to its buyout by ARMZ Uranium in 2011.

At press time Keegan was trading at $3.99 per share within a 52-week range of $2.38 to $6.33. The junior has 75 million shares outstanding.