Private equity company Generation Asset Management (UK) Ltd is to acquire new shares in the Canadian mining company Helio Resource Corp. through a private placement.

Helio owns 100 per cent of the Lupa goldfields of southwest Tanzania. The private placement was scheduled to close on or about May 3, 2013 and was being done at the TSX Venture Exchange in Canada.

In the private placement, Helio Resource Corp. plans to raise $1.75 million to finance its mining operations in the Lupa goldfields, southwest of Tanzania. The Tanzania mining sector has recently attracted major multinationals and according to the Tanzania Chamber of Minerals and Energy, contributes about 2.3 per cent of the gross domestic product. This is however expected to increase to about 10 per cent of the GDP in 2025, based on the projections of the National Development Vision 2025.

Helio said the non-brokered private placement will comprise 25 million units at a price of $0.07 per unit. Each unit shall consist of one common share of the company and one common share purchase warrant of the company.

Besides Generation Asset Management (UK) Ltd, CE Mining Ltd, a company jointly-owned by private equity and Plinian Capital Ltd, have already agreed to buy most of the shares.

CE Mining Ltd, a Guernsey-based company, will subscribe for a minimum of 20,000,000 units at a cost of $1.4 million and the remaining five million units will be up for grabs by other companies. If CE Mining subscribes for the 20 million units as expected, it will own 14.75 per cent of the issued and outstanding share capital of the company upon closing of a fully subscribed placement. 

All securities issued in connection with the private placement will be subject to a four-month holding period during which the securities cannot be traded. Completion of the private placement is subject to a number of conditions including completion of satisfactory due diligence investigations and receipt of all necessary regulatory approvals.

Some of the companies that have recently been attracted to the growing gold and other precious metals exploration include; British nickel miner African Eagle Resources with operations near Lake Victoria; SIKA Resources Inc. with operations at its Ntundu Property located in the Lake Victoria Goldfields; and Lake Victoria Mining Company with operations at its  Kinyambwiga project in northern Tanzania, among tens of other companies.

Tanzania is the fourth largest gold producer in Africa after South Africa, Ghana and Mali. Gold production currently stands at roughly 40 tonnes a year.

“The proceeds from the private placement will be used for the advancement of the resource at Helio’s 238km² SMP Gold Project in the Lupa Goldfields of South West Tanzania, and for general corporate working capital purposes,” said the company in a statement.