Teck’s Aussie assets catch Gwalia’s eyes

Vancouver Australian gold and tantalum producer Sons of Gwalia (SGW) has tabled a $170-million takeover bid for Teck‘s (TEK-T) Australian gold-mining arm, PacMin Mining.

The share-swap offer would see SGW acquire all of PacMin’s ordinary shares. The exchange rate would be five SGW shares for 28 PacMin shares. The company has also offered to acquire all of PacMin’s redeemable converting preference shares, which are all held by Teck, for $5.03 each in cash.

Teck holds 97.45 million, or 74%, of PacMin ordinary shares and 7.7 million preferred shares, giving the diversified miner an 80% equity stake in PacMin.

In 2000, PacMin’s Tarmoola mine produced 180,000 oz. gold. This was 41,000 oz. less than in the previous year. In the second quarter, Tarmoola produced 58,000 oz. gold, similar to a year ago.

This year, production began at PacMin’s new, A$40-million Carosue Dam mine in Western Australia. Carosue Dam tabled 26,000 oz. gold in the second quarter. The operation is expected to produce 120,000-130,000 oz. gold this year. At last report, reserves stood at 15.5 million tonnes grading 2.18 grams gold per tonne, equivalent to 1.1 million contained ounces. An additional 126,000 oz. are contained in 3.5 million tonnes grading 1.1 grams.

PacMin also holds properties in the Leonora region, a 51% interest in publicly listed Northern Gold NL and a 33% stake in the Chariot gold project in the Tennant Creek region of the Northern Territory.

Prior to the announcement, the last traded share price of SGW pegged the offer at A$1.20 per share, putting the overall deal at $170 million.

Teck is considering the offer, which is subject to SGW being granted 90% of PacMin’s shares.