Trillion expands into South Africa

An agreement to acquire a partial interest in a South African company is expected, directly and indirectly, to provide Trillion Resources (TSE) with annual production credits of more than 55,000 oz. gold. The deal will also give the company proven and probable reserves for more than 20 years of production.

Trillion plans to acquire a 30% stake in Consolidated Mining Corp. (CMC), the holding company of South Africa’s seventh-largest gold mining group. This group has three operating gold mines in the country, as well as other mining interests and exploration properties in Africa.

CMC’s primary asset, West Wits, is one of the largest open-pit gold mines in South Africa, having turned out 110,000 oz. last year. Total production for the CMC group was 155,000 oz. in 1994, and minable reserves stand at 3.3 million oz.

“This transaction represents a big step up for Trillion and brings us into a reserve base

of 1 million oz. gold,” says Michael Halvorson, vice-president of corporate development. “We think we are buying into a good operating company, with lots of upside (potential), which has been trading below its market value.” A 20% interest would be acquired by way of a share exchange with some of CMC’s largest shareholders, and another 10% would result from Trillion’s investing $5.5 million in CMC. The former will also invest $10 million in the latter’s 46.5% held chief operating subsidiary, West Witwatersrand Gold Holdings, enabling it to acquire a 10% direct interest in West Wits. As Halvorson explained, the transaction is expected to benefit both companies. Trillion’s $15.5-million investment will be used partially to upgrade the mill at West Wits in an attempt to boost production to 157,000 oz. gold in 1996. At this level, current reserves would last more than 20 years, and it is believed additional potential underground might extend the mine life to 40 years.

Last year, the CMC group earned $6.7 million and paid out about $4 million in dividends.