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EganStreet Resources sets Rothsay gold agenda as shareholders mull Silver Lake bid

Snapshot

Shareholders are considering a takeover offer from Silver Lake Resources, which the board has recommended they accept.

EganStreet Resources Ltd - Egan Street Resources sets Rothsay gold agenda as shareholders consider Silver Lake bid

Quick facts: Egan Street Resources Ltd

Price: 0.46 AUD

ASX:EGA
Market: ASX
Market Cap: $64.23 m
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Acceptances of Silver Lake Resources’ takeover offer close on November 1, 2019. 

Silver Lake’s offer values the company's securities at 40 cents a share, a premium to the current share price. 

EganStreet is a feasibility study-level company that updated its DFS for its flagship Rothsay Gold Project earlier this year. 

The company has a clearing permit for the Western Australian project and is working on works approval and mining licence applications. 

During the past 12 months (the) company has continued its commitment to realising the objective of becoming a new, high-grade gold producer at the 100%-owned Rothsay Gold Project which is located 300km northeast of Perth in Western Australia’s mid-west region.

EganStreet Resources non-executive chairman Barry Sullivan

What does EganStreet Resources do?

EganStreet Resources Ltd (ASX:EGA) is a gold explorer and takeover target with ambitions to become a high-grade producer at its flagship project in Western Australia.

The company is completing a works approval and licence application for regulators and is hoping to make its project construction ready so that it can start development once financing arrangements are in place.

EganStreet is the subject of a takeover bid by Silver Lake Resources Limited (ASX:SLR) (FRA:4SL) (OTCMKTS:SVLKF) which had a 30.43% voting stake on September 17, 2019.

Eastern Goldfields miner Silver Lake has made an off-market bid for its smaller investment EganStreet.

Shareholders have until 7pm Eastern Standard Time on November 1, 2019, to accept the 40 cent-a-share offer from the Mount Monger Camp producer.

The EganStreet board has recommended the company’s investors accept the offer.

Who leads Egan Street Resources?

The company is led by managing director Marc Ducler, a metallurgist with more than 20 years’ mining industry experience.

Ducler has held senior executive roles for more than 13 years and has worked with Gold Fields Limited (NYSE:GFI) (JSE:GFI) (SWX:GOLI) (OTCMKTS:GFIOF) on St Ives and Agnew, BHP Group Ltd (ASX:BHP) (LON:BHP) (NYSE: BHP) (SWX:BHP) (OTCMKTS:BHPLF) on Mt Whaleback, Fortescue Metals Group Limited (ASX:FMG) (FRA:FVJ) (OTCMKTS:FSUGY) (OTCMKTS:FSUMF) on Cloudbreak and MRL at Carina Iron Ore Mine and at Gina Rinehart’s majority-owned Roy Hill.

The MD serves on the board with mining engineers Barry Sullivan and Lindsay Franker and resources lawyer Simon Eley.

Sullivan is the company’s non-executive chairman while Franker is an executive director.

What does EganStreet Resources own?

The key asset is the Rothsay Gold Project 300 kilometres north-northeast of Perth.

Rothsay contains high-grade gold and featured 1.54 million tonnes grading 9.2g/t for 454,000 ounces in a November 2018 update to the resource.

The project had a 7-year mine life in a February 2019 update to the company’s July 2018 definitive feasibility study (DFS) for the gold project.

Forecast life-of-mine (LOM) gold production for Rothsay is now 289,000 ounces produced by processing 1.3 million tonnes grading 7.2 g/t.

This increase was based on an updated mine design and the late-2018 resource estimate.

EganStreet’s Rothsay DFS update also increased undiscounted pre-tax project cash flow to put the estimate at A$116.1 million.

Forecast LOM C1 cash costs are A$876 an ounce in the study while all-in sustaining costs (AISC) are A$1,069 an ounce.

Sullivan highlighted the company’s focus in its September 27, 2019, annual report, writing “During the past 12 months (the) company has continued its commitment to realising the objective of becoming a new, high-grade gold producer at the 100%-owned Rothsay Gold Project in Western Australia’s mid-west region.”

He noted new targets were identified at Karara Shear north of high-grading resources this year while more extensive zones of high-grade resources were discovered.

Sullivan wrote, “Drilling has confirmed the presence of significant high-grade mineralisation on the historically mined Orient Shear, which is considerably more extensive than we previously thought.

“Drilling confirmed the mineralised position at Orient and Clyde East shears extending beneath the existing three Orient open pits, with plans in place to follow up with infill and extensional drilling later this calendar year.”

Inflection points

  • Results of Silver Lake bid for investment EganStreet, expected after November 1
  • Results of annual general meeting on November 22
  • Silver Lake’s plans for EganStreet investment and/or takeover
  • Financier interest in funding Rothsay
  • Regulatory approval progress with Western Australian Government
  • Results from continued exploration at Rothsay this year and beyond, especially for high-grading zones and targets
  • Further updates to DFS resources estimates
  • Updated mine designs
  • A maiden reserve
  • Future investment decisions and significant transactions
  • Gold industry sentiment in Western Australia, Australia and globally

Egan Street Resources will hold its annual general meeting in Western Australia at the offices of BDO, 38 Station Street, Subiaco, at 10am local time (1pm EST) on November 22, 2019.

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