CATALPA POST-MERGER

Post-merger, Catalpa Resources will be a significant mid tier gold company and one of Australia’s four largest producers with the following key attributes:
  • Focused high margin gold company producing 130,000+ oz per annum following Edna May commissioning.
  • An experienced board and operations management team.
  • An increase in the size and scale of operations from two assets:
    • 30% joint venture interest in the Cracow Gold Mine in Queensland with a share of current production of around 30,000 oz per annum at a cash cost of A$500–A$530/oz and a mine life in excess of 5 years based on current mine plan inventory; and
    • 100% interest in the Edna May Gold  Project in Western Australia which, when commissioned in mid 2010, is planned to produce at a rate in excess of 100,000 oz per annum with an estimated life of mine cash operating cost of $636/oz (pre-royalty), a current mine life of around 8 years and 352,317 oz sold forward at a fixed flat price of A$1,544/oz.
  • Both mines have significant potential to add additional resources and reserves through near mine exploration success.
  • Hold a pre-emptive right over the balance of the Cracow project. 
  •  30% direct interest in Cracow Gold Mine in Queensland
The Cracow Gold Mine, located in the Theodore region of southern Queensland, commenced operations in November 2004 and has consistently produced around 100,000 ounces per annum for the last three years. Ore throughput capacity exceeds 400,000 tonnes per annum with ore currently being sourced from the Royal, Sovereign and Crown mineralised zones.
 
Lion’s share of gold produced at the Cracow Gold Mine for the twelve months to 30 April 2009 was 30,121 ounces at cash operating cost of less than A$550/ounce. Lion is unhedged, and continues to be fully exposed to the currently high A$ gold price for its share of Cracow gold production, providing a strong cashflow stream.
 
Ore Reserves for the project at 30 June 2008 were 176,479 ounces at 8.6g/t gold, compared with a Mineral Resource of 703,019 ounces at 7.77g/t. Exploration success has led to the successful delineation of the 200,000 ounce Kilkenny Resource, which is a new ore shoot on a previously unexploited structure and was included in the Mineral Resource for the first time in 2008. Recent drilling on the Kilkenny structure has intersected further gold mineralisation to the south of the resource and Lion believes this will extend the known mineralization envelope, adding further potential for mine life extension.
 
Under the terms of the Joint Venture Agreement, the new gold company will hold the pre-emptive right over Newcrest Mining Limited’s 70% interest in the Cracow Gold Mine.
 
  • 100% interest in Edna May Gold Project in Western Australia
 
The Edna May project is located mid-way between Perth and Kalgoorlie in Western Australia, and was the subject of a Feasibility Study completed in 2008. The project has an open pit Ore Reserve of 817,000 ounces within a Mineral Resource of 1.5 million ounces.
 
Construction commenced second quarter of 2009 with first gold production targeted for June 2010. The Feasibility Study estimated a capital cost of A$92 million. The project is intended to process 2.8Mtpa initially, ramping up to 3.2Mtpa with an estimated life of mine cash operating cost of A$636/ounce (pre-royalty).
 
Edna May is fully funded, with project development funds having been raised during early 2009. These comprise a A$67.5 million project finance facility with Macquarie Bank Limited and A$38.9 million equity funds raised. Gold production has been partially hedged with 352,317 ounces sold at a fixed flat forward price of $1,544/ounce.

 

Board and Management
On completion of the merger, the Board of Catalpa will comprise: 

Chairman Peter Maloney Ex Lion
Managing Director Bruce McFadzean Ex Catalpa
Non Executive Directors John Rowe Ex Catalpa
  Barry Sullivan Ex Lion and Catalpa
  Murray Pollock Ex Catalpa
  Graham Freestone Ex Lion

 The existing management team of Catalpa will remain in place.

ADVISORS
Austock Corporate Finance is acting as financial adviser and Freehills is acting as legal adviser to Catalpa in relation to the Merger.

E.L & C. Baillieu Stockbroking Ltd is acting as corporate adviser and Blake Dawson is acting as legal adviser to Lion in relation to the Merger.