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Drummond Gold increases interest in Apex Minerals on The Metal Group deal

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Drummond Gold (ASX: DGO) is set to take up a 14.9% interest in Apex Minerals (ASX: AXM) following an agreement between Apex and The Metal Group, a privately owned investment vehicle controlled by Andrew Forrest.

A total of 35.3 million unlisted options will be issued to Drummond in recognition of the company’s role in facilitating the transaction. The options will be issued on a post-consolidation basis.

This issue will bring Drummond’s total holding in Apex Minerals to 45.3 million unlisted options in Apex at various exercise price and exercise dates.

As a result, Drummond will have a 14.9% fully diluted holding in Apex Minerals, behind The Metals Group which is expected to have a 19.9% stake on completion of the deal.

Approval from Apex shareholders for the issue of the options will be sought at a shareholder meeting in June.

In addition to the options, Drummond will receive an arrangement fee of $350,000 for facilitating the transaction between Apex and The Metal Group.

Drummond has agreed to sub-underwrite Apex’s rights issue for $250,000, resulting in the acquisition of 125 million shares at a price of $0.002 per share.

Apex turnaround

Drummond has been involved in the turnaround of Apex Minerals, with the proposed appointment of Drummond’s directors on the Apex board to help re-establish Apex as a sustainable Australian gold producer.

Apex’s key asset is the Wiluna Mine in Western Australia, which has previously produced 4 million ounces of gold.

In the December 2011 quarter Apex produced 9,726 ounces at a cash cost of $1,696 per ounce, and for the past twelve months produced 52,089 ounces at a cash cost of $1,509 per ounce.



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