Integra Mining to take up substantial stake in neighbour Southern Gold

Integra Mining (ASX: IGR) is set to take up a 10% interest in Southern Gold (ASX: SAU), whose Bulong Gold Project neighbours Integra's Randalls Gold Project in Kalgoorlie, Western Australia.

Integra will invest A$1.35 million in Southern Gold at A$0.05 per share through a share subscription agreement.

Southern Gold is also planning a rights issue to shareholders that aims to raise a further $3 million.

Integra has agreed to take up its full entitlement under the proposed rights issue, and also has the option to underwrite the issue.

This would allow Integra to maintain its cornerstone investment position in Southern Gold. An ultimate cap of 15% has been placed on Integra’s shareholding.

Southern Gold will use the funds raised through the share placement and rights issue to advance evaluation studies into mining the Cannon Gold Resource, 30 kilometres southeast of Kalgoorlie.

The wholly owned Cannon Gold Resource is part of the Bulong Gold Project, which comprises the Bulong South and Bulong East tenements.

One potential processing option for Bulong Gold is Integra’s Salt Creek Gold Processing Facility.

Salt Creek is part of Integra’s Randalls Project, which comprises resources at Salt Creek, Maxwells and Cock-eyed Bob as well as exploration prospects at Lucky Bay, Mohegan, Lady Eileen and Red Dale.

Earlier this month, Integra achieved 100,000 ounces of gold production at Randalls, less than a year after ramping up to first commercial gold production in March 2011.

Importantly, Southern Gold has agreed to grant Integra a pre-emptive right to match or better any third party offer to purchase, treat or sell ore or dore from the Cannon Gold resource or to purchase the Cannon Gold resource mining lease.

This pre-emptive right has a maximum term of 3 years from completion of the placement and is conditional on Integra not disposing of any of the placement shares to a third party.

Integra managing director Chris Cairns said the agreement with Southern Gold was a strategic move for the company.

“The transaction with Southern Gold is in keeping with Integra’s strategy of growing our gold business and generating shareholder value. We see Southern Gold as a solid investment with real opportunity for near-term gold production along with a prospective tenement portfolio nearby to our operations”.

Completion of the share placement to Integra is due to occur on Wednesday February 1, 2012.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/24676/integra-mining-to-take-up-substantial-stake-in-neighbour-southern-gold-24676.html