Thistle Mining eyes South African assets

Thistle Mining (THT-T) has signed a heads of agreement to acquire three companies, which own and operate five underground gold mines in the Free State region of South Africa from Johannesburg-listed President Steyn Gold Mines.

Under the agreement, Thistle will pay US$32 million in cash, plus a monthly royalty of US$8 per oz. of gold for five years. Thistle must also pay, via a dividend within 30 days of closing, an amount equal to the after-tax net profits generated by the acquired companies from September 19 until the deal closes.

The deal is expected to become effective on January 1, 2002.

The assets to be acquired by Thistle include:

• Mindserv Ltd., including its wholly owned subsidiary, President Steyn Gold Mines (Free State) Ltd. in which the gold mining operations are conducted;
• TM Training Initiative (TMTI); and
• President Steyn’s loans to Mindserv, PSGM Free State and TMTI.

PSGM Free State operates five mine shafts in the Welkom and Odendaalsrus area, plus a gold processing plant in Welkom.

During the recent quarter, gold production by PSGM Free State was 45,597 oz. at a cash cost of US$ 213 per oz. The company realized about US$247.83 per oz. for that production. For the first nine months of the year, production tallied to 134,743 oz. at an average cost of US$ 218 per oz.

TMTI, a mining and technical college, provides technical occupational training to many of the mines in the Free State area. Thistle plans to continue TMTI’s operation.

To fund the acquisition, Thistle has appointed Endeavour Financial Corp. in London to arrange US$25 million in bank finance repayable over five years. Canaccord (Europe) have been appointed to raise another US$10 million via a convertible loan note issue. Canaccord will also act as sponsoring broker to bring Thistle to the Alternative Investment Market in London.

Following the news on Monday, Thistle shares shot up 12 or more than 66% to 30 on the Toronto Stock Exchange.

Last week, Vancouver-based Northern Orion Explorations (NNO-T) inked an agreement 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, by issuing between 93.6 million and 201 million shares, depending on the assets remaining in President Steyn Gold Mines at the time of closing.

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.