Arrow Minerals Limited (ASX: AMD) reported that it has entered into a binding agreement to acquire privately-owned Burkina Faso exploration company, Boromo Gold Limited.
AMD said that it plans to acquire 100% of Boromo Gold Limited in an all-scrip transaction worth $2.9 million.
It may be noted that Boromo owns 6 exploration projects in Burkina Faso, West Africa, with drill targets already identified at multiple projects. Among them, at Divole East, a 2,500m RC drilling programme is currently underway, where historic drilling has intersected 10m @ 4.3g/t Au (from 48 metres).
Arrow reported that $2.0 million placement has been completed to fund exploration in Burkina Faso and Western Australia.
The company also announced that it has entered into a strategic alliance with Capital Drilling to provide drilling services in Burkina Faso. Capital Drilling will also subscribe for $0.8 million in the placement.
Arrow reported that prominent mining executives with significant West African exploration experience will join its Board and Management.
Holdings of Boromo Gold limited
Boromo Gold limited holds a 100% interest in 12 exploration licences and two exploration licence applications, totalling 2,013km2, across six gold projects in Burkina Faso in West Africa.
The most advanced projects are Divole East and Divole West, where target generation and first pass drilling has been completed.
Boromo is currently completing a 2,500m reverse circulation (RC) drilling programme at Divole East, where previous drilling by Boromo had intersected 10m @ 4.3g/t Au from 48m.
Acquisition of Boromo and rights of GenGold
Boromo’s largest shareholder is GenGold Resource Capital Pty Ltd. For Arrow’s acquisition of Boromo, GenGold has converted 75% of its shareholding in Boromo to Performance Rights (PR), demonstrating significant support for the transaction and alignment of value for all shareholders.
Following completion of the Transaction, GenGold will hold 209.0 million Arrow PR. The PR will vest in three equal tranches based on achievement of certain milestones.
Arrow said that it has entered into an arrangement with GenGold whereby Arrow has the “first right of offer” for two years on all gold projects GenGold has or will have in Burkina Faso, subject to any pre-existing agreements GenGold has with other parties.
Terms of the $2.9m acquisition
According to acquisition terms, Arrow will issue 10 Arrow shares for each Boromo share and 10 Arrow PR for each Boromo PR, valuing Boromo at $2.9 million (excluding PR). The Acquisition is subject to Arrow shareholder approval at a shareholder meeting expected to be held in early-August 2019.
Raising funds, other alliances
Arrow announced that it has received commitments from corporate, institutional and professional investors to raise $2.0 million through a two-tranche equity placement at an issue price of 1¢ per share plus a 1 for 2 attaching option (ex. price 2¢, expiry 3 years from issue).
The Company anticipates that Tranche 1 of the Placement will complete on or around 4 July 2019 and Tranche 2 will complete in August 2019.
Arrow said that it has also entered into a strategic alliance with Capital Drilling Limited who will subscribe for $0.8 million of shares in the Placement and also provide drilling services to Arrow in Burkina Faso over an initial two-year period.
Board restructuring
Arrow said that it will restructure its Board and Management to add significant West African gold exploration experience, including the appointment of Mr. Howard Golden as Chief Executive Officer and Mr. Tommy McKeith and Mr. Morgan Ball as Non-Executive Directors.
Arrow’s Managing Director, Mr. Steven Michael, will continue as an Executive Director of the Company and Chairman of the Board, Dr. Frazer Tabeart, will remain in this position. Meanwhile, the current Non-Executive Director, Mr. Nicholas Ong, will retire from the Board.
Future plans
Arrow said that the results from the current drilling programme at Divole East are expected to be announced in August 2019.
The company said that further exploration work will occur across all projects, utilising skilled staff, fit for purpose techniques including drainage sampling, soils, auger, geological mapping, ground and airborne geophysics.
Arrow said that specific targets for follow up have been defined at Divole East and Divole West.
Management Comments
Arrow’s Managing Director, Steven Michael said: “The Acquisition of Boromo gives Arrow and its shareholders immediate access to a portfolio of gold exploration projects in one of the world’s fastest growing gold producing countries.
Burkina Faso is now the fourth largest gold producer in Africa and has known gold endowment of over 60 million ounces.
Boromo has held most of the exploration licences for two years and over that time has completed first pass exploration, including geochemistry (soil and stream sediment sampling), auger drilling and geophysics (airborne and ground EM surveys).
There are now drill-ready targets at multiple projects, with drilling at Divole East currently underway.
Following completion of the capital raising, Arrow will be well funded to aggressively explore its gold projects in Burkina Faso and Western Australia, with a focus on high-quality drill targets and year-round exploration.
Also, the support of Capital Drilling, both strategically and financially, will enhance Arrow’s ability to complete multiple drill programmes in Burkina Faso.
The changes in Board and Management will be a key driver for the future success of the Company and returns to shareholders.
Specifically, Howard Golden and Tommy McKeith have decades of experience working in West Africa and will ensure the seamless integration of the two companies. Finally, I would like to thank Nicholas Ong for his support and commitment to Arrow over the past eight years.”