Gold mining company Besra Gold (ASX:BEZ), through subsidiary North Borneo Gold, has struck a binding US$300 million gold purchase agreement with major shareholder Quantum Metal Recovery.
The company’s share price had rocketed 100% to $0.440 on the ASX as of 2.20pm AWST on the back of the announcement after surging 50% at 11.50am.
The agreement gives effect to a non-binding term sheet signed by the companies on 21 March 2023.
Under the terms of the agreement, Besra will sell Quantum up to 3 million ounces of refined gold from the Bau Gold Project in Malaysia or any other gold projects it holds in return for a US$300 million deposit from Quantum to be paid over 30 months.
This facility is conditional on the completion of security documentation, shareholder approvals, and regulatory compliance from the Australian Securities Exchange (ASX) and Canadian Business Corporations ACT (CBCA) within 85 business days of the gold purchase agreement.
Once these conditions have been satisfied, Besra says the second instalment of US$3 million will be remitted to the company in 3 business days. This follows the initial US$2 million instalment received on 4 April 2023.
The cash raised will be used to fund the development, construction, operation, and commissioning of the Bau Project
Following the initial $5 million deposit, Quantum will provide cash payments of up to US$10 million per month to acquire additional refined gold from Besra up to the maximum deposit limit of $US$300 million.
The cash raised will be used to fund the development, construction, operation, and commissioning of the Bau Project, as well as to renew mining leases for Besra’s projects, conduct exploration and mining activities to increase gold resources, and complete mergers and acquisitions to increase the gold resources available to Besra.
Additionally, Besra has agreed to pay an offtake facility fee of $1 million to be satisfied by issuing to Quantum over 11.11 million chess depositary interests (CDI) at $0.09 per CDI. The company notes the facility was negotiated on behalf of Besra by its shareholders and corporate advisor Noblemen Ventures.
As Besra moves toward the development phase of its project, Chief Executive Officer (CEO) Dr Ray Shaw will move into the role of Chief Operating Officer (COO).
Commenting on the agreement, Besra Gold Executive Chair Jocelyn Bennet says: “The announcement of progress this landmark agreement, as well as the accompanying corporate changes, moves Besra’s 3 million ounce Bau Gold Project closer to production.
In particular, this extraordinary funding deal should provide ample funding for the development of Bau and allows us to bring the project into production in a way that is uniquely non-dilutive to our shareholders and to retain exposure to gold price movements, free of hedging and other onerous covenants.
“Whilst we have several conditions precedent yet to fulfil we expect the US$300 million facility to be fully operational by 30 June 2023”
Whilst we have several conditions precedent yet to fulfil we expect the US$300 million facility to be fully operational by 30 June 2023.
I would also like to take this opportunity to thank Ray Shaw for his valuable contribution as CEO of Besra over many years and the work he has led to date on the Bau Project. We feel that the development and exploration potential of the project he has helped unlock should be the envy of our peers.”
Besra expects the conditions of the agreement to be satisfied by the end of Q2 2023. Subject to the receipt of shareholder approval, the company says security will be provided to Quantum over the company’s indirect shareholding the North Borneo Gold, its interests in the tenements comprising the Bau Goldfield, and a bank account in which the deposits from Quantum will be held.
Quantum Metal Recovery Executive Chairman Dato Lim Khong Soon says: “We are most pleased to have taken the next step in a long-term involvement with Besra and the Bau Goldfield. This opportunity to secure a material long-term supply of gold for our bullion trading business is very propitious, and we expect to commence deposit of funds following satisfaction of the conditions.”
Perth-based Acacia Executive Search has been appointed by Besra to recruit a replacement CEO. In the meantime, the company says Shaw’s former corporate duties will be shared between Executive Director John Seton and Chair Jocelyn Bennett.
Besra will also look to strengthen its board with the addition of industry-experienced professionals with a proven history of project delivery. The company says further announcements will be released as appointments are made.
Besra Gold is an ASX-listed gold explorer focused on developing the 3-million-ounce Bau Goldfield in East Malaysia. The Bau Project hosts a total JORC-compliant measured resource of 3.4 million tonnes @ 1.5g/t Au for 166.900 ounces; an indicated resource of 16.4 million tonnes @ 1.6g/t Au for 824,000 ounces; and an inferred resource of 47.9 million tonnes @ 1.3g/t Au for 1.989 million ounces.
Quantum Metal Recovery is a wholly owned subsidiary of Quantum Metal, a Malaysian supplier and trader of precious metal products and a bullion-providing specialist in gold.
Images: Besra Gold Inc
