Metro Mining Inks Deal to Substantially Increase Stake in Gulf Alumina

Metro Mining Inks Deal to Substantially Increase Stake in Gulf Alumina

Australia’s Metro Mining Limited announced yesterday that it has signed agreements to increase its stake in Gulf Alumina Limited to roughly 39% of the latter’s issued capital.

Metro Mining says that the agreement means acquiring the shares held by four long-term Gulf shareholders. The acquisition cost Metro Mining A$8.5 million, which was funded by an unsecured commercial loan arranged by Metro Mining. Upon consummation of the sale, Metro Mining’s cash position in Gulf will total A$8.9 million.

The firm went on to say that it will continue to develop the Bauxite Hills Project, which is a 100%-owned mining project in Cape York. Metro Mining says that it remains “open” to combining its projects with those of Gulf in order to “unlock significant synergies and commercial benefits for the shareholders of both companies.”

According to experts, Gulf’s operations are already adjacent to those of Metro Mining’s, and the two firms have similar reserves, resources, and infrastructure. Both use infrastructure left behind by Kaolin mining.

Analysts opine that the deal places Metro Mining in a favorable position for taking advantage of synergies with Gulf that amount to about A$200 million. Metro Mining’s choices to date appear to be paying off at least in the eyes of the market, as the company’s shares have more than doubled over the last year. Metro Mining’s shares are reported to be trading in the neighborhood of A$0.125.

This is the second major financial announcement in a month from Metro Mining. The firm announced three weeks ago that it had obtained shareholder approval to issue shares to Greenstone Metro Holdings LP. The move is part of Metro’s strategic funding arrangement, allowing it to go forward on its Bauxite Hills project in Queensland.

Metro Mining is based in Brisbane, and began life when it was spun off from Cape Alumina Ltd. upon its takeover by MetroCoal Ltd in 2014. The firm has exploration rights in over 500 square miles of western Cape York, which is second to only Rio Tinto Alcan.