China Inc has continued its raid on WA's gold sector, scooping up a majority stake in Goldfields miner Focus Minerals in a heavily dilutive $227.5 million share placement.
Focus managing director Campbell Baird defended the deal yesterday, saying it was "an investment in Focus, not a takeover". State-backed Chinese company Shandong Gold - a subsidiary of one of China's three biggest gold producers - will take 51 per cent of Focus through a 4.55 billion-share placement at 5¢ per share.
The deal, which has been brewing since January, will result in Shandong representatives taking three Focus board seats.
Speaking at his Perth office yesterday, Mr Baird said Shandong did not necessarily have a mandate to take control of the loss-making gold miner.
"The 51 per cent does give that level of control for them . . . but the board will continue to be an independent board.
"I don't see them saying: we're in control, this is what you'll do . . . because Focus will remain an Australian mining company run by Australians, employing Australians and operating in Australia."
Focus mined 176,632 ounces at its four Coolgardie and Laverton mines in the year to June 30, but struggled with costs, mining at an average cash cost of $1222/oz last financial year.
The company lost $8.3 million in the 12 months to June 30 and had $16 million in the bank.
When asked whether Focus needed the deal to survive, Mr Baird was steadfast. "It wasn't a case of, 'We're in trouble, let's get an investor in'," he said.
"We've been working on this for a long time. It hasn't been a decision due to problems in the organisation, because there aren't any - and we see it as a massive opportunity."
Focus yesterday had a market value of $185 million and 4.3 billion shares on issue.
In addition to funding "ongoing working capital needs", the cash injection would fund exploration and potentially other local acquisitions - both an effort to grow the scale of Focus' operations and reduce average cash costs.
With a shareholder voted needed to approve the placement, Mr Baird urged shareholders to give it the green light.
"It is a $225 million investment that will enable us to fund our drill rigs, well, forever," Mr Baird said.
It is the second major deal involving a Chinese company in WA's gold sector this year after Zijin Mining took control of Norton Gold Fields earlier this year.
The deal is still subject to Foreign Investment Review Board approval.