Angus & Ross buys gold mine

Finance for the deal has come via a $1.25m loan bearing a hefty 15% annual interest

02/07/2009 Robert Tyerman

Mining minnow Angus & Ross has bought the Nalunaq gold mine in Greenland for an initial £1 million (£920,000).

The AIM-quoted company, which began life as a tantalum prospector and has more recently focused on reopening Greenland’s Black Angel iron ore mine, has bought the assets of Nalunaq, which was mined from 2004 and then put on care and maintenance last year, with a view to resuming production and earning ‘near-term cash flow’. Angus & Ross is buying the mine from Surrey-based Crew Gold Corporation and must pay another £460,000 by the end of August or earlier if formal approval comes by then from the relevant committee of the Greenland parliament and the £1.8 million from the Mine Closure Security Fund is satisfactorily transferred.

Finance for the deal has come with a $1.25 million (£780,000) loan from New York-based Cyrus Capital Partners, bearing a hefty 15 per cent annual interest and subject to a £59,000 arrangement fee. Cyrus is deemed a ‘related party’ because it holds warrants at an exercise price of 20p, many times today’s AIM quote, over shares equivalent to some 17 per cent of the equity of Angus & Ross.

Chief executive officer Nicholas Hall declares the Nalunaq deal ‘a major step in the transformation of the company. We believe the mine can be operated profitably by adopting a mining method that will enable us to employ local labour and by producing concentrate on site’.

Angus & Ross shares, which hit 25p in 2001 on Ofex (now PLUS quoted) before floating on AIM that year, have swung between 5.13p and 0.5p over the past year. They now trade at 2.13p, valuing the company at £5.2 million.