25 May 2012

Chinese back Oxus Gold

07/01/2010 Robert Tyerman

Oxus Gold half-owns Amantaytau gold mine in Uzbekistan

Oxus Gold half-owns Amantaytau gold mine in Uzbekistan

As foreshadowed here in September, a group of Chinese companies is buying control of Oxus Gold in a £115 million financing deal.

A consortium of Chinese concerns, including Baiyin Non-Ferrous Group and the major state-owned CITIC investment group, is buying new shares at 6p and convertibles and warrants in AIM-quoted Oxus exercisable at 7p and 10p. These moves, which will lift the company’s AIM value from nearly £35 million to more than £140 million, form the core of a financing package that should enable the company to start underground production next year from its half-owned Amantaytau gold mine in Uzbekistan.

The deal will give Chinese consortium more than 70 per cent of Oxus, falling to 65 per cent if existing loan holders convert to shares. Tien Wei of CITIC will become chairman of Oxus, which, suggests current chairman Richard Shead should be able to increase gold production from Amantaytau to 300,000 oz a year.

Oxus also proposes to consolidate its depressed shares on a one-for-seven basis. Since the company’s 2001 AIM float at 30p, the shares, which initially rose above 50p, plunged to 3.73p on repeated delays and snags at Amantaytau.

They have now reached 9p and, while not risk-free, could now begin to make solid progress.

Tags: AIM, Commodities, Mergers & acquisitions

Sector: Mining

Companies: Oxus Gold

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