LEADERSHIP

AngloGold backs Orinoco

Junior's Brazilian venture attracts heavyweight

Michael Quinn

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AngloGold will become a 15% shareholder in the junior by tipping $A5.9 million into Orinoco in return for shares priced at 7c – the same pricing as a current $12.2 million rights issue that’s been pitched at shareholders.

 

The major will also have the right to earn up to 70% in ground Orinoco has around its Cascavel mine by spending $US9.5 million over three years.

Somewhat curiously the deal also involves AngloGold having the right to try and negotiate an earn-in or acquisition of up to 50% of the Cascavel mine.

The curiosity about this is the modest headline profile of Cascavel – with current milling capacity of 100,000 tonnes per annum – though with no formal resource due to the nuggetty nature of the gold, and the potential for 2-3 lodes to be ultimately mined, it is difficult to get any sort of fix on what the project could be capable.

Clearly it would seem AngloGold, which has its own operations about 150km northeast at Serra Grande, sees the potential for something of substance at Cascavel.

Orinoco managing director Mark Papendiek pointed out the company was under no obligation to sell down its 70% stake – with a Brazilian partner holding the balance. 

Papendiek told MNN the aim was to get Cascavel into operation later this year, after teething problems and capital constraints stymied the venture last year.

Shares in Orinoco were down 40% to 6.9c in midday trade after trading in the company resumed following its suspension last October.

 

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