LionGold eyes more gold-mining targets as sector consolidates

PHOTO: LionGold eyes more gold-mining targets as sector consolidates

SINGAPORE - LionGold Corp Ltd, the Malaysian-controlled, Singapore-listed gold miner, is now actively looking at acquiring gold-producing targets to help it achieve a production target of 200,000 oz of gold by the end of 2014.

"(Gold) producing assets are now within our target as they are cheaper," said Lesley Bendig, LionGold's head of investor relations.

Bendig, who was speaking to the media after LionGold's AGM last week, explained that LionGold had previously been focused on acquiring companies still at the exploration and development stage.

Via an aggressive acquisition strategy since March last year, LionGold presently owns seven gold-mining projects in Australia, Canada, Ghana and Bolivia. Two of these are already producing while the rest are at different stages of exploration and development.

In a span of 18 months, LionGold has managed to acquire gold-mining assets that cumulatively hold 6.8 million oz in gold resources.

Indications are that more acquisitions are in the offing for LionGold, and this time the target assets would be already producing gold mines.

"The (share) prices of gold-mining companies have fallen a lot and this has further advanced our ability to acquire gold-producing assets," Bendig explained.

The decline in gold prices this year has led to an even more massive sell-off of small and mid-sized gold miners' shares.

According to LionGold's presentation material, its expansion opportunity lay in the "consolidation of a highly fragmented sector."

On prospects for 2014, the company stated: "Gold price volatility has created a window of opportunity to access gold-mining assets, including producing mines, at substantial discounts, as this sector consolidates."

Just last week, LionGold made a buyout offer for Canadian-based and listed Acadian Mining Corp. Acadian's two main projects hold a combined gold resource of 1.3 million oz. LionGold had initially bought 9 per cent in Acadian earlier this year.

Since the announcement, Grant Ewing, Acadian's president and chief executive, had reportedly said that the deal would give the junior mining outfit access to capital to develop its two gold projects on the eastern shore of Canada.

"Without LionGold coming in like this, Acadian would certainly have been continuing to struggle to advance its projects," Ewing had reportedly said.

Meanwhile, LionGold chief executive officer Nicholas Ng said the company was looking to raise S$100mil this year to fund its merger and acquisition drive.

When asked about the possibility of listing one of its existing assets, Ng said that might take place one to two years down the road.

On the issue of declining gold prices, LionGold's management reiterated that it was taking a long-term view on gold. It said the current softening of gold prices had worked to LionGold's advantage, as it had led to depressed share prices of gold miners, putting LionGold in a good position to source for cheap acquisition targets.

Matthew Gill, LionGold's chief operating officer, pointed out that the Ballarat mine (one of LionGold's producing gold mines) in Australia had an operational production cost of around A$810 per oz. Gold spot prices are presently at around US$1,300.

StarBiz had reported in June that LionGold was poised to embark on another series of acquisitions that could nudge it to become one of Asia's largest gold mining players, quoting sources.