Far East Gold Ltd (ASX:FEG, OTC:FEGDF) welcomes the Foreign Investment Review Board (FIRB) advice provided to strategic investor Xingye Gold (Hong Kong) Mining Company Limited that the Commonwealth Government has no objections to second and third tranche funding.
This funding is part of the conditional share placement agreement with Xingye, which will see the subsidiary of A$4 billion major Chinese miner Inner Mongolia Xingye Silver & Tin Mining Co., Ltd, make an investment in Far East Gold of more than A$14 million for a 19.99% stake.
READ: Far East Gold attracts major Chinese miner Xingye as strategic partner with A$14 million investment
Xingye is the largest silver producer in China, one of the largest silver producers in the world and China’s second-largest tin producer.
Satisfies condition
Written FIRB confirmation satisfies the FIRB condition in the agreement relating to Tranche 2 and Tranche 3 with all conditions now satisfied in respect of Tranche 2, which is valued at around A$4 million.
Tranche 3, valued at approximately A$3.85 million, remains subject to shareholder approval at the Extraordinary General Meeting on November 29, 2024, which, if approved, will take Xingye’s stake in Far East Gold to 19.99%.
The company will issue Tranche 2 and Tranche 3 shares upon receipt of the funds, providing the third tranche is approved.
Validates portfolio
Far East Gold CEO Shane Menere said: “This is another significant milestone which Far East Gold has achieved this year.
"Partnering with one of China’s most successful precious metals producers validates the potential of FEG’s portfolio of world-class assets and gives the company a clear pathway through to project development in 2025.”
All tranches are priced at A$0.20 per share, which at the time of the agreement in early September 2024 represented a 47% premium to the company’s recent placement and share purchase plan and a 21% premium to the company’s last traded price.
READ: Far East Gold receives first A$6.4 million tranche of investment by Xingye
Technical expertise
Along with the significant investment, FEG, which is primarily focused on gold and copper in Indonesia, is expected to benefit from Xingye’s deep technical expertise in bringing greenfield projects through to production.
Menere previously said: "We are delighted to welcome Xingye as a strategic partner because it ticks all our boxes – significant funding, deep technical expertise and full alignment with our strategic goals for our portfolio of high-quality assets.”
Three tranches
The conditional placement comprises the issue of an envisaged 71,236,739 shares at A$0.20 per share over three tranches.
Tranche 1:
- Targeting to take the subscriber’s subscription shares to approximately 9.99% of issued capital in the company.
- Indicatively, if the Tranche 1 subscription amount was paid at the date of the agreement, then this amount would be A$6,336,114.
- Falls under existing placement capacity (Listing Rule 7.1 and Listing Rule 7.1A).
- Conditions include signing Conditional Share Purchase Agreement contemplated by the Idenburg Binding Term Sheet and the subscriber obtaining various Chinese regulatory approvals.
Tranche 2:
- Targeting to take the subscriber’s subscription shares to the level where the total shares subscribed for exhaust Far East Gold’s current placement capacity (Listing Rule 7.1 and Listing Rule 7.1A).
- Indicatively, if the Tranche 2 subscription amount was paid at the date of the agreement, then the amount would be A$4,054,194.
- Falls under existing placement capacity (Listing Rule 7.1 and Listing Rule 7.1A).
- Subject to the same conditions as Tranche 1 as well as FIRB approval.
Tranche 3:
- Targeting to take the subscriber’s subscription shares to 19.99% of issued capital in the company.
- Indicatively, if the Tranche 3 subscription amount was paid at the date of the agreement, then the amount would be A$3,857,039.80
- Would exceed existing placement capacity (Listing Rule 7.1 and Listing Rule 7.1A) and therefore be subject to shareholder approval.
- Subject to the same conditions as Tranche 2 as well as FEG shareholder approval.
“A perfect fit”
At the time of the agreement, Xingye chief executive officer Shucheng Zhang said: “We are pleased to make this significant investment. Far East Gold’s portfolio represents a perfect fit for Xingye’s competencies around bringing the highest-quality greenfield projects all the way through to production.
“We are looking forward to working closely with the Far East Gold team to achieve this.”
Xingye will be entitled to nominate one director for appointment to Far East Gold’s Board of Directors, subject to FIRB approval and completion of Tranche 2.
READ: Far East Gold defines maiden 540,000-ounce gold resource at Idenburg