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Meridien Resources to acquire 2.5Moz gold project in South Africa

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Meridien Resources (ASX: MRJ) has entered into a conditional agreement to acquire 100% of the issued share capital of Stonewall Mining, which holds an effective 74% interest in a Measured and Indicated gold Resource of 0.7 million ounces and an Inferred Resource of 1.85 million ounces.

Stonewall’s 74% interest is in the Transvaal Gold Mining Estates (TGME) and Sabie Gold Mines tenements, located in the eastern goldfields of South Africa.

The Sabie-Pilgrims Rest Goldfield is the oldest gold mining district in post-colonial South Africa, with historical production being estimated at 6 million ounces.

The project covers an extensive prospecting area of around 62,000 hectares, less than 10% of which has been explored in recent times.

Stonewall has already begun trial processing of TGME tailings which has proven commercial recoveries of 30%, demonstrating that once full scale mining begins in 2012 recovery rates will increase above historical levels of 65-70%.

Another defining factor of the project is that TGME and Sabie are located in proximity to established plant, mine and surface infrastructure.

Stonewall is fully funded to undertake further Resource drilling during the coming six months. The company is expected to spend about A$6million on exploration over a 12 month period.


TGME Resources


Total Resources for the TGME Project’s underground operation are 545,600 ounces in the Measured and Indicated categories and 1.8 million ounces in the Inferred category.

For surface operations the total Resource is 155,000 ounces in the Measured and Indicated categories and 27,900 ounces in the Inferred category.

The drilling program for 2012 will target an increase of 1-1.5 million ounces in the Inferred Resource and the upgrade of between 0.35 and 0.7 million ounces from Inferred to Measured and Indicated.


The Deal


To satisfy the deal, Meridien will issue 398 million shares in the company. Meridien shares are currently trading at around $0.12, valuing the transaction at about $47.8 million.

The company will also issue 25 million options to acquire one Meridien share exercisable at A$0.20, expiring three years from the date of settlement of the acquisition.

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ASX:TGM
Market: ASX
Market Cap: $78.61 m
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