Noble Mineral Resources has become the third WA gold producer in less than four months to attract major Chinese investment, after resources firm Zhongrun took a big chunk of the miner in an $85 million share placement.
In what Noble managing director Wayne Norris described as a crucial deal for the future of the company, Zhongrun will take a 41.5 per cent stake in Noble, with the option of increasing that to a controlling 51.6 per cent stake if $55.4 million options are cashed in at a 23¢ share price.
As foreshadowed in WestBusiness yesterday, the Chinese-backed investment in Noble is the latest in a string of buy-ins from Chinese companies, following on from Zijin’s takeover of Norton Gold Fields in June and last week’s 51 per cent share placement by Shandong Gold in Perth-based Focus Minerals.
As part of the deal, Zhongrun, a multi-faceted private investment firm worth more than $1 billion, will have two employees join the Noble board.
However, Mr Norris said Zhongrun was a long-term strategic partner that backed its current management team to turn around its fortunes at its struggling Bibiani gold mine in Ghana.
“They (Zhongrun) are fully supportive of our vision,” Mr Norris said.
“They do have some ideas of their own which we will obviously discuss and probably implement as we go forward.”
Noble had been searching for a white knight for nearly two months after going into an extended trading halt at the start of last month.
The company owes Investec and other creditors just under $50 million, and had gone back to the market three times before prior to this announcement for cash injections.
It had $6.5 million at bank at the end of June after its Bibiani mine produced only 6500 ounces in the June quarter.
Mr Norris said they had offers from several parties over the process but settled on Zhongrun who offered “value and certainty” for shareholders.
He said Noble was now “fully-funded and unhedged” as the company made moves to ramp up its production towards 150,000oz of gold per annum.
“This transaction will comprehensively deal with our recent funding concerns and allow us to unlock Bibiani’s full potential and maximise the value of the project.”
Investors reacted positively to the deal, pushing Noble’s shares up 4.5¢, or 37.5 per cent, to 16.5¢.