16th Jul 2015 07:24
LONDON (Alliance News) - Central Rand Gold Ltd shares dropped on Thursday after it threw in more doubt about the potential sale of its Dutch subsidiary as it said it was talking to the potential buyers about "structural alternatives" and warned it remains "cautious" about a deal being completed.
Central Rand shares were down 10% to 17.55 pence per share on Thursday morning.
The company has a range of assets, all based in South Africa, that are held by the Dutch subsidiary that's up for sale.
The two companies in the frame to buy the subsidiary are Huili Resources (Group) Ltd and Hiria Group Co Ltd. Originally, Central Rand had entered four separate non-binding memorandum of understandings with Huili, Shengbang Jiabo, the Hiria Group and Beijing Ankong Investment.
The deadline to complete a deal has already been extended twice. The last deadline expired on Wednesday, but Central Rand did not state whether or not the deal had been extended again on Thursday despite talks continuing.
The previous extensions have been to allow both Huili and Hiria to complete outstanding due diligence processes and advance commercial negotiations to a point which can be presented to shareholders.
On Thursday, Central Rand said: "Since the announcement dated June 15, 2015, the company has worked closely with both Huili and Hiria to finalise their respective due diligence processes."
"The company has worked closely with Hiria over the past four weeks to resolve both technical due diligence and commercial items. Central Rand Gold has been impressed by the level of engagement," it added.
The gold miner said negotiations with Hiria are now "substantively focused on commercial and structural issues", and said discussions will continue with Hiria until "an outcome which can be presented to shareholders is reached," it said Thursday.
However, Central Rand said it was also discussing "structural alternatives" with Hiria and its financial partner Hangzhou Everbright Private Equity Investment Management , which range from the acquisition of the subsidiary, as planned, to a "strategic investment" in the company.
Only one of the two companies, Huili or Hiria, can purchase the subsidiary and on Thursday Central Rand confirmed that Huili Resources has the right of first purchase within 21 days of a third party offer being received for the Dutch subsidiary.
The talks with Hiria about "structural alternatives" suggests that a separate deal could be struck between the two companies should Hiria exercise its right to purchase the subsidiary.
Central Rand said talks with Huili Resources are now focused on technical due diligence items largely focused on the future dewatering of the Central Basin in South Africa, which its assets cover.
"The discussions continue to progress towards completion and the company will advise shareholders once a resolution is achieved," said Central Rand.
"The board cautions that at this time there can be no certainty that the discussions with both Huili or Hiria will lead to a binding agreement being entered into by either party, nor that the potential sale of Central Rand Gold (Netherlands Antilles) N.V., or any other transaction will be completed," said Central Rand.
By Joshua Warner; [email protected]; @JoshAlliance
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