Red 5 Ltd. executed two separate deals to acquire the King of the Hills and the Darlot gold mines in Western Australia from Saracen Mineral Holdings Ltd. and Gold Fields Ltd., respectively, according to separate Aug 3 statements by the companies.
To acquire the Darlot project, Red 5 will pay A$18.5 million, comprising A$12 million cash and 130 million Red 5 shares. The cash component is made up of A$7 million upfront and A$5 million deferred for up to two years. Gold Fields can take additional shares of Red 5 against the deferred consideration.
For the King of the Hills mine, Red 5 will pay A$16 million. Saracen will receive A$7 million as upfront cash, 90 million Red 5 shares and a further A$4.5 million in cash or shares.
Red 5 will assume all environmental responsibilities for the project.
In addition, Red 5 intends to undertake a rights issue on a 1-for-3 basis at a price of 5 Australian cents per share to raise up to A$12.7 million.
The rights issue will be underwritten by Gold Fields for up to A$8.5 million and subunderwritten by Saracen for up to A$1.5 million.
Red 5 said the deals are in line with its new growth strategy of acquiring an asset portfolio in the Eastern Goldfields region of Western Australia.