Australian firm to buy company that’s digging huge SC gold mine

A global mining corporation has a deal to acquire Romarco Minerals Inc., the Canadian company that is digging what’s expected to be the largest industrial-scale gold mine ever developed in South Carolina.

Details of the $660 million transaction were still emerging Thursday, but OceanaGold and Romarco said the acquisition will create “an industry-leading, low-cost and globally diversified gold mining company.’’

Romarco chief executive officer Diane Garrett said the deal with OceanaGold would not be final until Romarco’s shareholders vote on the acquisition in October.

Garrett, one of Romarco’s major shareholders, said she would recommend accepting the deal. The Romarco and OceanaGold boards of directors have signed off on the agreement, according to OceanaGold.

Under the plan, OceanaGold will own about 51 percent of the new company and Romarco will own about 49 percent, Garrett said, calling the deal a merger, not a hostile takeover.

Up to $2 billion worth of gold lies underground at Romarco’s Haile mine site in Lancaster County.

OceanaGold wants Romarco’s management team and employees at the Haile mine project to remain, she said. The mine will employ 300-350 people when fully operational sometime next year. Initial work began this year.

OceanaGold, headquartered in Melbourne, Australia, owns major gold mining sites in New Zealand, the Philippines and El Salvador. Its flagship mine is in the Philippines. The company also has a North American office in Vancouver, Canada.

The company says it is committed to environmental protection, although it is involved in a dispute in El Salvador over whether the company can mine in an ecologically sensitive area.

“We believe the addition of the low-cost, long-life Haile Gold Mine provides such an opportunity while underpinning an industry-leading business,’’ Mick Wilkes, managing director and CEO of OceanaGold, said in a statement Thursday.

There has been speculation that Romarco would try to sell the South Carolina mine once it obtained all the environmental permits for the gold-digging operation. The company obtained the last of those permits late last year. Garrett said Romarco had no plans to sell and was not marketing the company, but she said Thursday the board of the company is obligated to take proposed acquisitions to its shareholders.

Romarco Minerals, of Toronto, is opening what the company has said is the biggest gold mine in the eastern United States. The site, near the town of Kershaw, is about halfway between Columbia and Charlotte. The mine will be on about 2,500 acres and will feature pits as deep as 840 feet. Up to 1,100 acres of wetlands could be affected by the project, to be developed over 15 years. The open-pit mine project in South Carolina is the first for Romarco, which began as a mineral exploration company.

Garrett said the transaction is important to the South Carolina project at a time of falling gold prices. Gold hit a five-year low this month at around $1,100 per ounce. Gold was approaching $2,000 per ounce when Romarco intensified efforts four years ago to open the mine.

“They are a really excellent group of mining professionals and we’ve liked the way they operate and the way they work with communities,’’ Garrett said of OceanaGold.

The transaction “ensures the financial future of the company,’’ she said, noting that OceanaGold has a cash flow of more than $100 million a year from its mining operations.

OceanaGold, however, has been involved in a standoff with the government in El Salvador over a mine it wants to open in the central American country. In legal filings before an international court, OceanaGold says the country imposed an illegal ban on mining of metals.

At issue is whether El Salvador’s government would have to pay OceanaGold about $300 million if the government won’t allow gold mining in the area. Three consecutive presidents of El Salvador have enforced the mining ban, according to a 2014 McClatchy newspapers story. Opponents in El Salvador worry that a gold mine will pollute environmentally important creeks and rivers.

Darren Klinck, head of business development for OceanaGold, said his company inherited the legal issue when it acquired the Pacific Rim gold exploration company about two years ago. He said the company is committed to environmental protection, as is evidenced by clean operations it runs in New Zealand and the Philippines.

Bob Guild, a Sierra Club lawyer who had challenged Romarco’s mining permit in South Carolina before settling the matter, said the proposed acquisition by OceanaGold reinforces concerns he has had about the permitting process. It was weighted heavily on Romarco Minerals with little thought about a possible sale and how that might affect future operations, he said.

South Carolina regulators should have required a higher cash bond to protect the environment if something goes wrong at the Lancaster County mine site, he said. Romarco pledged $10 million in cash for a cleanup after settling a dispute with the Sierra Club. But he said the amount left is not ideal.

Now, a new company that few people know has entered the picture, he said.

“The expectation was that once Romarco had minable properties that are permitted, they would flip their investment and cash out,’’ Guild said. “Absolutely this is a concern.’’

Romarco has won support throughout much of Lancaster County and South Carolina as it moved to obtain permits for the project during the past four years. The company has said it would take care of the environment, including containing any acid that could affect creeks nearby – a major concern with many gold mines nationally.

Romarco’s major dispute was with the Sierra Club over the amount of money the company would post to clean up any problems at the site after it closes. That was settled in early 2015 with the company’s pledge to put up an extra $5 million in cash for a cleanup. Initial concerns by the U.S. Environmental Protection Agency also were resolved.

Most environmental groups signed off on the project because of Romarco’s plan to protect nearly 5,000 acres of property to offset the scars created by mining in Lancaster County. Those properties include Cook’s Mountain and Goodwill Plantation along the Wateree River in lower Richland County southeast of Columbia. The Wateree River land will become a state nature preserve that is expected to open this fall. Cook’s Mountain is one of the highest spots in the flat land of central South Carolina.

This story was originally published July 30, 2015 at 11:20 AM with the headline "Australian firm to buy company that’s digging huge SC gold mine."