Turkish gold family seeks near-30% stake in Canadian company developing two Tanzanian mines

A gold industry business owned by Turkish investor Ozcan Halaç has proposed investing C$27.2 million in Lake Victoria Gold, a Canadian-listed company developing the Imwelo and Tembo gold projects in Tanzania. HOB Energy FZCO would purchase approximately 90.7 million Lake Victoria Gold shares at C$0.30 per share under a non-binding term sheet announced on October 20.

• Turkish investor Ozcan Halaç’s HOB Energy has proposed investing C$27.2 million in Canadian-listed Lake Victoria Gold.
• A parallel share placement could raise total financing to C$32.2 million for its Tanzanian gold projects.
• HOB could acquire a 29.17% stake, gain board representation and influence the development of the Imwelo and Tembo projects.
• The deal remains subject to approvals, and neither project has a current mineral reserve established under Canada’s NI 43-101 standards.

If the proposed investment and a parallel offering to existing shareholders are completed in full, HOB would own approximately 29.17% of Lake Victoria Gold’s ordinary shares. Its fully diluted interest would stand at 25%.

The size of the proposed holding means HOB would become a “control person” under TSX Venture Exchange rules, giving the Turkish-backed investor substantial influence over the company’s direction.

A possible C$32.2 million financing package

Lake Victoria Gold has also proposed issuing as many as 16.7 million additional shares to selected existing major shareholders at the same C$0.30 price. That portion could raise another C$5 million and allow participating investors to limit the dilution of their holdings.

Together, the two placements could provide Lake Victoria Gold with as much as C$32.2 million in gross proceeds.

In its October 20 announcement⁠, the company said the funds would be used to move the fully permitted Imwelo project towards production, expand drilling and resource work at Tembo, and provide general working capital.

Who is Ozcan Halaç?

HOB is registered in Dubai and wholly owned by Ozcan Halaç, whose family has operated across Turkey’s gold refining, trading and precious-metals industries for several generations.

According to Lake Victoria Gold, the family owns and operates a major refinery accredited under the London Bullion Market Association’s Good Delivery system. Halaç has also held a leading role at Istanbul Gold Refinery.

The proposed investment would take the family further upstream, from refining and precious-metals trading into the ownership and development of African gold assets.

HOB’s involvement would extend beyond providing capital. The proposed investor rights agreement would allow it to appoint as many as three directors to Lake Victoria Gold’s reconstituted seven-member board while its interest remains above specified thresholds.

HOB would also be allowed to appoint a chief operating officer. A technical steering committee would have two representatives from each side, with a HOB nominee serving as chairman.

The arrangement would give Halaç’s company influence over engineering, procurement, project development and other major operational decisions.

The Tanzanian assets at stake

Lake Victoria Gold owns the Imwelo project, west of AngloGold Ashanti’s Geita mine, and the Tembo project near Barrick Gold’s Bulyanhulu operation.

Imwelo is fully permitted, according to the company, and is being positioned as its nearer-term development asset. Tanzanian contractor Taifa Mining is expected to undertake contract mining and civil works at the project.

Tembo is an exploration and development project with more than 50,000 metres of historical drilling. Lake Victoria Gold has proposed a toll-milling arrangement with Nyati Resources as a possible route to earlier production while it continues exploring the property.

However, the company has cautioned that neither Imwelo nor Tembo currently has a mineral reserve established under Canada’s NI 43-101 reporting framework. Its production plans are not supported by a current feasibility study demonstrating economic and technical viability.

There is consequently no certainty that either project will enter commercial production.

Deal still needs approval

The transaction remains a proposal under a non-binding term sheet. Completion is targeted for on or before November 30, subject to due diligence, regulatory and exchange approvals and the approval of disinterested Lake Victoria Gold shareholders.

Because HOB would become a control person, written consent must be obtained from shareholders representing more than 50% of eligible shares, excluding holdings connected to HOB.

Existing shareholders who do not participate in the parallel placement would face dilution. HOB, meanwhile, would gain a large equity position, board representation and direct involvement in the development of two Tanzanian gold properties.

The financing could give the projects a stronger capital base, but the consequences depend on the agreement becoming binding, the money being transferred and the technical and economic viability of the mines being demonstrated.