$2m fully funded open offer for challenger
TRANSCRIPT
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ASXANNOUNCEMENT 7December2015
$2mFULLYFUNDEDOPENOFFERforChallenger
OpenoffertoKingsgate(ASX:KCN)
KeyNewPoints
• FULLYFUNDEDofferMarmota’sofferfortheChallengerGoldMine(andrelatedassets)isnowfullyfunded
• Byrnecutannouncedaspreferredoperator
FullyFundedofferMarmotaEnergyLimited(ASX:MEU)(“Marmota”)hasenteredintoabindingHeadsofAgreementwithAsymmetricInvestmentManagementPtyLtd(aWA-basedhedgefund)toeffectthatMarmota’sAUD$2mofferfortheChallengerGoldMine(andrelatedassets)isnowfullyfunded.IntheeventthatMarmota’sofferissuccessful,anaccountwillbeestablishedforsettlingtheacquisition,withtheAUD$2mfundslodgedtobeusedexclusivelytopayKingsgateConsolidatedLtdfortheChallengerGoldMine.IntheeventthatMarmota’sfullyfundedbiddoesnotproceed,Marmotadoesnotincuranycosts.
TermsofMarmotaOffer Price:$2millionFULLYFUNDED (TWICEthepriceofferedbyWPG)
AllothertermsIDENTICALtoWPGoffer(asdisclosed).
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PreferredoperatorannouncedMarmotaisalsopleasedtoannounceundergroundminingspecialists,ByrnecutAustraliaPtyLtd,aspreferredcontractoperatortooperatethemine,contingentonMarmota’sbidbeingsuccessful.•ByrnecutaretheexistingoperatorforKingsgateoftheundergroundmine
atChallenger,andsobringwiththemunparalleledknowledgeandexperienceoftheexistingoperations.
•MarmotaandByrnecutbelievethattherearefurthersynergiestobe
obtainedbyByrnecutrunningboththeundergroundoperationsandtheabovegroundplant.
DrColinRose,Marmota’sChairman,said:
“Byrnecutarethecurrentoperatorsofthemineandsoknowthemineintimately.Byrnecutarealreadythere…upandrunning.ByutilisingByrnecutasoperator,asuccessfulMarmotaofferwillensurethatanyminedowntimeduringthetransitionofownershipwillbeminimized:themachineryisthere,thestaffarethere—allalreadyoperational.Marmota’sofferwillminimizeunemployment,minimiseredundancies,minimizeunnecessarycosts,minimiseanydowntime:itisanelegantcombination.AddtothatthepotentialofMarmota’sWestpointHilljust25kmtothewest,andtheattractionofMarmota’sofferiseasytosee.”
WhyisMarmotaofferingmore?
• MarmotahasrecentlyidentifiedaNEW,LARGEGOLDanomalyintheGawlerCraton,just25kmwestoftheChallengergoldmine,nearWestpointHill[seeASXrelease:26October2015]
• ThediscoveryoftheexceptionalanomalismatWestpointHillcloselymirrorshowChallengerwasdiscovered.
• MarmotaseekstoexploitthepotentialsynergyfromWestpointHillandtheChallengergoldmine(just25kmapart)…apotentialupliftthatonlyMarmotaisabletooffer.1
1 Bycontrast,WPG’sTarcoolaandTunkilliatenementsarelocatedover100kmawayfromChallenger—
morethan4timesthedistance.
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Whyanopenoffer?PriortotheannouncementbyKingsgate(30Oct2015)ofan‘exclusiveoption’toWPG:
1) FollowingadiscussionbetweenthechairsofKingsgateandMarmota,Marmotaformallyengagedtheservicesofhighlyrespectedfinancialbroker,EmpireSecurities,on28October2015,toactonbehalfofMarmota,topurchaseChallengerfromKingsgate.ThefinancialbrokeriswellknowntoKingsgate,andwasresponsibleforthefloatsthattookKingsgatefroma10ccompanytosubsequentsuccess.
2) KingsgateChairman,RossSmyth-Kirk,advisedthebrokerthatMarmota’sinteresttoacquireChallengerwasacknowledged,andhadbeenpassedontoKingsgateCEO,GregFoulis.
3) EmpireSecuritiesformallyadvisedKingsgatethatMarmotawouldbetteranyofferonthetable.Marmotacandothisbecause,overandabovetheintrinsicvalueofChallengeritself,MarmotaalsohasthepotentialsynergyofitsnewWestpointHillprospectjust25kmawayfromChallenger.
4) Kingsgate’slettertotheASXof4November2015confirmsthattheywereformallyapproachedpriortoKingsgateenteringintoanoptionwithWPG.
5) KingsgatedidnotgetbacktothebrokerorMarmota.Instead,itannouncedon30October2015thatithadenteredintoan“exclusiveoption”withWPGfor$25,000––anoptionwhichdoesnotlockinanyobligationsforKingsgateorKingsgateshareholders,butdoesservetolockoutallotherinterestedparties.
6) Nordoesthegrantingofsuchoptionon30October2015negatethefactthatMarmota’soffer(tobetterallotheroffers)wasmadepriortoKingsgateenteringintotheoptionagreementwithWPG.
AninvitationtoKingsgateshareholders: …toshareinthepotentialofWestpointHillTheWPGoffer(30October2015)providesalmostnoupsidepotentialtoKingsgateshareholders.Kingsgatehastopayallthecostsofputtingthemineintocareandmaintenance(inthemillions);Kingsgatereceivesnopaymentbeyondtheinitial$100,000optionanddepositfeesuntiltheminere-opens(ifitdoes);KingsgategetsnoroyaltyfromorefromthemainChallengerarea;noroyaltyfromorefromChallengerWest;noroyaltyfromanyoreminedfromanyofKingsgate’ssurroundingtenements(bundledindealtoo);noroyaltyfromanyoreprocessedfromanyneighbouringcompany’stenements:theonlyroyaltyis$25perouncefromtheChallengerSSWZone,shoulditeverbedeveloped,andeventhen,onlyafter30,000ounceshavebeenproduced.Bycontrast,MarmotaishappytoextendtoKingsgateshareholdersaninvitationtoshareinthepotentialofboththeChallengermine(whichis,afterall,yourasset)
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andfromthepotentialofMarmota’sexcitingnewWestpointHilldiscoveryofexceptionalgold-in-calcreteanomalism,withstrongparallelstothediscoveryofChallengeritself.WhileMarmotaishappytomakeapurecashdeal,Marmotaisalternativelyalsowillingtomakeacombinationcash(minimum$1mtomatchWPGoffer)+equityofferingtoKingsgateshareholders,sothatKingsgateshareholderscanjoininandbenefitfromanyupliftfromasuccessfulrejuvenationofChallenger,andalsoprosperfromthepotentialoftheexceptionalanomalismatMarmota’sWestpointHill.Eitherway,inMarmota’sopinion,Marmota’sfullyfundedofferisunequivocallysuperior.
LocationoftheWestpointHilltargetMarmota’sWestpointHilltargetislocatedabout25kmwestoftheChallengerGoldMine,inMarmota’s100%ownedLakeAnthonytenement(EL5060),intheWoomeraProhibitedDefenceArea,inthehighlyprospectiveandsignificantlyunderexploredGawlerCraton[seeFigure1].
Figure1: Marmota’sGawlerCratonGoldProject
WestpointHillislocatedabout25kmwestofChallenger
[TheWPGtenementslieoutsidethemaparea,totheSouthEast]
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COMPARISONTODISCOVERYOFCHALLENGERHowChallengerwasdiscoveredChallengerwasdiscoveredbyacalcretesamplingprogramona1.6kmx1.6kmgrid.Thisprogramyieldedastand-outsamplepointof180ppbAu,surroundedonallsidesbygridpointsyieldingbelow10ppbAu[seeFigure2a].The180ppbAupointwasapproximately400mawayfromwheretheChallengergolddepositwasultimatelydiscovered.
Figure2a:HowChallengerwasfound:gold-in-calcreteAdaptationofdiagramfromWillsandEdgecombe(2014)2
HowtheanomalyatWestpointHillwasfoundMarmotahasadoptedthesamecalcretesamplingmethodologythatwasusedtofindChallenger.However,insteadofusingacoarse1.6kmx1.6kmgrid(whichcaneasilymissanomalies),Marmotaimplementeda800mx800mgridatWestpointHill.LikeChallenger,highlyanomalousgold-in-calcretesamplesstandoutatWestpointHillrelativetothesurroundinggrid[seeFigure2b],includingaresultof107pbbAu.Importantly,thestand-outresultsatWestpointHillcovernotjustonegridpoint,butthreecontiguousgridpoints,spanningapproximately2km.[seeASXrelease:26October2015]
Figure2b:AnomalyatWestpointHill
(gold-in-calcreteppb)
2Wills,K.andEdgecombe,D.(2014),DiscoveryoftheChallengerGoldMine,Presentation6June2014,
AdelaideConference(SouthAustraliaBranch:AustralianInstituteofGeoscientists).
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Forfurtherinformation,pleasecontact:
AboutMarmotaEnergyLimitedMarmota Energy Limited (ASX:MEU) is a South Australian mining exploration company,focused on gold, copper and uranium. Gold exploration is centred on the Company’sdominant tenement holding in the highly prospective and significantly underexploredGawlerCraton,near theChallengergoldmine, in theWoomeraProhibitedDefenceArea.The Company’s cornerstone copper project is based at theMelton project on the YorkePeninsula. The Company’s largest uranium project is at Junction Dam adjacent to theHoneymoonmine.Formoreinformation,pleasevisit:www.marmotaenergy.com.au
MarmotaEnergyLimitedDavidWilliamsManagingDirectorEmail:[email protected]
Level30,WestpacHouse91KingWilliamStreetAdelaideSA5000ABN:38119270816T:(618)70884883F:(618)70884884www.marmotaenergy.com.au