Condor Gold plc and Metals Exploration plc have agreed the terms and conditions to the Metals’ recommended offer for Condor.
DIVERSIFICATION
Announced two days ago, the offer is intended to be implemented by means of a court-sanctioned scheme of arrangement, although Metals reserves the right to a takeover offer.
Completion of the acquisition, which includes the flagship La India project along with Estrella and Rio Luna in Nicaragua, is expected during the first quarter of 2025.
Condor said that the offer represented the best opportunity for its shareholders “to gain exposure to additional scale and the opportunities offered by the combined group”.
Metals has received irrevocable undertakings in favour of the offer from Galloway Ltd owned by Condor’s chairman, Promaco Consulting Services Ltd owned by non-executive director Ian Stalker and Condor directors owning Condor shares.
The parties hold, in aggregate, 58,838,266 Condor shares representing 28.8% of the company.
On completion of the offer, Condor shareholders will hold approximately 33.8% of the enlarged share capital of the combined group.
The figure is based on the existing issued ordinary share capital of Metals and the fully diluted in-the-money ordinary share capital of Condor.
Metals said that the acquisition was in with its growth strategy to build a “diversified cash generative portfolio of projects.”
The gold exploration and production company currently has two projects in the Philippines.
The Runruno mine in Nueva Vizcaya has reached a mature stage with limited remaining life of mine and the early-stage Abra copper-gold exploration project in the Central Cordillera region in Abra, Luzon.
Metals will use its expertise and “substantial” existing cash reserves and future free cash flow from Runruno to begin construction of Condor’s planned La India gold operation.
The company also entered into an unsecured bridging term loan facility for £5.5 million with Drachs Investments No. 3 Ltd in connection with the offer.
“Condor Gold’s assets present a compelling opportunity to simultaneously acquire a well-explored and substantial gold project with a relatively near-term path to production, diversify geographically, and strategically expend the free cash flow its Runruno mine is generating to increase the potential for enhanced returns to shareholders,” added Metals.
“MTL [Metals]’ management team brings a proven track record, having orchestrated a turn-around of MTL’s operational and capital difficulties from 2019 to its current cash generative position.”
Chief executive officer Darren Bowden has more than 15 years’ experience in Central-South America.
He is expected to establish a Spanish speaking team of mining professionals to add to Metals’ existing team.
Chairman Nick von Schirnding said: “There is a clear development path to production at La India, that will provide cashflow at an opportune time, replacing that from Runruno as it approaches the end of its life of mine.
“The La India gold project is shovel ready.
“Additionally, La India offers significant upside resource potential and we look forward to commencing the agreed exploration work programme.”