Red 5 has struck agreements to buy Gold Fields' Darlot mine and Saracen Mineral Holdings' King of the Hills mine for a combined $34 million in cash and shares.
![](https://static.businessnews.com.au/sites/all/themes/bn2020/images/squares.gif)
![Red 5 buys two gold mines](https://static.businessnews.com.au/sites/default/files/styles/medium_906x604/public/articles-2017-08/raleigh%20finlayson_saracen_1440.jpeg?itok=Phf7EOLU)
Red 5 has struck agreements to buy Gold Fields' Darlot mine and Saracen Mineral Holdings' King of the Hills mine for a combined $34 million in cash and shares.
Saracen told the market this afternoon it had received $7 million in up-front cash and 90 million Red 5 shares in exchange for the asset, plus a further $4.5 million in either cash or shares.
As part of the deal, Saracen will sub-underwrite $1.5 million out of a $12.7 million rights issue that Red 5 is undertaking. South African miner Gold Fields is underwriting $8.5 million of the raising. It will be priced at 5 cents a share.
Gold Fields has also sold its Darlot mine in WA to Red 5 for $18.5 million.
Red 5 will pay $12 million in cash and 130 million in shares to buy the asset.
Managing director Mark Williams said the deals marked the beginning of a new chapter for the company.
"We have entered into binding agreements to acquire two significant Western Australian gold assets which, together, establish the foundations for a long-term consolidation and growth strategy in one of Australia’s most prolific and active gold districts, the Leonora-Leinster region of WA," he said.
“The cornerstone of this strategy is the proposed acquisition of the Darlot gold mine from Gold Fields – a transaction which allows the Red 5 group to transition immediately back into gold production at a wellestablished gold mine in Australia where we can leverage our operational experience and capabilities.
“In parallel with this, we will immediately begin work to examine development options for our second key project, the King of the Hills project, which we are acquiring from Saracen Minerals.
"This is a strategic asset which we believe can be enhanced due to its proximity to Darlot as a central processing hub, its grade, and the extensive studies and trial mining activities already completed by Saracen.
“Collectively, these acquisitions represent the cornerstone of a consolidation strategy which puts Red 5 in an ideal position to establish Darlot as a central processing facility capable of unlocking many undeveloped gold deposits within this region."
Saracen managing director Raleigh Finlayson said the sale of the King of the Hills mine was an opportunity for the company to crystallise value from an asset that had become non-core.
“We are experiencing outstanding growth at the Karari and Thunderbox mines, located immediately adjacent to the Carosue Dam and Thunderbox mills respectively,” he said.
“While King of the Hills is a high-quality asset, its potential as a source of ore is being displaced by the abundance of higher margin ore closer to milling infrastructure.
“Red 5 is aiming to bring it into production as part of a wider consolidation strategy, and Saracen will retain ongoing exposure to this through its shareholding – a good outcome for both parties.”
PCF Capital Group conducted the sale process for Saracen.
Saracen shares were 2.2 per cent lower to $1.32 each at the close of trade.