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MENAFN - ProactiveInvestors - Australia - 01/11/2012

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AusNiCo has dealt itself into the Australian tin sector through the merger with public unlisted company Taronga Mines. The deal provides AusNiCo with an advanced-stage project that can be brought into the development phase following the completion of a Scoping Study in 2013.
(MENAFN - ProactiveInvestors - Australia) AusNiCo (ASX: ANW) and the public unlisted tin exploration company Taronga Mines Ltd are to merge, creating an advanced stage company with exposure to tin, nickel, copper and gold.

Consideration for the deal is that five AusNiCo shares will be offered for every one Taronga share, with the offer implying a value of 0.12 per Taronga share - or around 6.9 million for all of Taronga's issued capital.

The move is a compelling one, and will provide AusNiCo with exposure to a new suite of commodities including tin.

Taronga currently holds a 100% interest in the Taronga Tin Project in New South Wales which is an advanced-stage project that can be brought into the development phase following the
completion of a Scoping Study in 2013.

Highlighting the potential of the project which covers close to 370 square kilometres of granted exploration leases, it is ranked the 14th largest undeveloped tin project in the world.

A pre-feasibility study at the project was completed between 1978 and 1983, including drilling in excess of 33,000 metres of diamond core and percussion holes.

Another plus for AusNiCo is that Taronga also brings a suite of complementary nickel sulphide, copper and gold project opportunities.

AusNiCo gains well-credentialed management

Another transaction highlight for AusNiCo is that it gains a well-credentialed management and exploration team from Taronga lead by Peter Williams, who will join AusNiCo as CEO.

The AusNiCo board will also be complimented by the appointment of two Taronga board members in John Bovard and Richard Willson - who bring strong project development skills.

Additional Offer details

The offer for all of Taronga's share capital values the company at around 6.9 million.

Taronga has 13,100,000 options on issue each exercisable at 0.20 (Taronga Options). AusNiCo proposes to offer five AusNiCo options exercisable at 0.04 per option exercisable by 30 June 2015 to Taronga Option holders in exchange for the cancellation of every Taronga Option held.

For Taronga shareholders, the offer represents a premium of 20% to the last capital raising conducted by Taronga in February 2012 at 0.10 per share.

The transaction will be implemented through an off-market takeover offer for Taronga, which will be subject to certain conditions summarised in Schedule 1, including a 90% minimum acceptance

Taronga's independent Directors have resolved to unanimously recommend that Taronga shareholders
accept the Offer, in the absence of a superior proposal.

The Taronga Tin Project

Extensive metallurgical test work, including pilot plant trials, has demonstrated the amenability of the ore to pre-concentration, upgrading the ore to a concentrator feed of approximately 0.46% Sn, 0.18% Cu and 11g/t Ag; (ii) a predicted tin recovery of 69%; and (iii) an average tin concentrate grade >55% Sn with few impurities.

More recent work completed by Taronga has identified a number of areas of key upside, including:

- Increased in-situ grade " comparisons of Newmont data on bulk grade of underground sampling and adjacent drill holes supports the potential for actual resource grades to be higher than estimated;

- Higher grades at depth " based upon a better understanding of the geological model, supported by historic drilling data at depth, including 2m* at 1.0% Sn from 351m in DG402-7; 1m* at 2.6% Sn from 169m and 1m* at 2.1%Sn from 213m in hole DG410-3E (Note * down hole length, true width is unknown);

- Increased tin recovery " application of modern comminution and gravity separation equipment
developed since the Newmont work was completed;

- By-product credits - recovery of copper and silver compared to nil by Newmont; and

- Exploration potential - McDonalds and Emerald are advanced exploration targets within trucking
distance of the Taronga Tin Project and could provide incremental tonnage.


The deal for AusNiCo shareholders is a very significant one, and delivers exposure to an advanced-stage tin project that can be brought into the development phase following the completion of a Scoping Study in 2013.

Another advantage with the move is that AusNiCo is that it follows the board strategy of gaining access to a commodity, being tin, that they believe has robust supply/demand fundamentals.

Tin prices have recently strengthened on the back of global supply deficit, and are trading above USD20,000/t. Tin remains the principal metal used in electronics solder, with future applications being developed in Lithium batteries and stainless steel.

Not to be forgotten is that the merger also brings a suite of nickel sulphide, copper and gold project opportunities, which complement AusNiCo's existing portfolio of early stage nickel sulphide exploration projects in Queensland and Tasmania.


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