Nev. Goldfields takeover approved

The takeover of financially troubled Nevada Goldfields (TSE) by Australian company Gwalia Consolidated was recently approved by shareholders of the Colorado-based company at a special meeting. Goldfields has also obtained permission to change its name to Consolidated Nevada Goldfields after Gwalia has completed the acquisition of 63% of the company’s 58 million issued shares.

Nevada Goldfields ran into trouble when low ore grades forced it to place its Kingston heap leach gold mine in Nevada on care and maintenance. The company’s only remaining producer — the Aurora in Nevada — is expected to yield roughly 13,000 oz. of the yellow metal this year, not enough to service a $4-million gold loan.

Shareholders have agreed to a reverse stock split permitting them to exchange six old Goldfields shares for one new one, thus reducing the number of shares issued to 9.8 million when the split is completed next month.

After acquiring $10.8 million in debt from Nevada Goldfields, Gwalia says it will cancel the debt, upon closing of the transaction. Gwalia, which plans to used Goldfields as a springboard for acquisitions in the U.S., recently made a private placement of $500,000 involving the issuance of 2.5 million Nevada Goldfields shares.

Over the next 34 months, by guaranteeing a gold loan and the private placement of US$2-million worth of Goldfields subordinated debentures convertible into 10 million common shares, Gwalia will provide Goldfields with $3.1 million in working capital. Goldfields can also utilize 49,649 oz. gold forward sales by Gwalia at US$423 per oz.

Under the agreement, Nevada Goldfields is acquiring Gwalia U.S.A., a unit of Gwalia Consolidated. Gwalia U.S.A. owns the Barite Hill mine in South Carolina where startup was delayed by problems with the leach pad. The mine is expected to produce about 20,000 oz. annually.

Gwalia Consolidated’s other assets include a 36.7% stake in Sons of Gwalia which produced 76,454 oz. gold while reporting a $27.7 million operating profit in the fiscal year ended June 30, 1990. Most of that output came from the Day’s Dawn mine in western Australia.

Gwalia Consolidated also owns 50% of the Moline mine in northern Australia which last year produced 30,000 oz. gold.