4th Sep 2015 17:16
LONDON (Alliance News) - Condor Gold PLC Friday said it has launched a formal strategic review which may lead to the sale of the company due to lower gold prices and because of the difficulty it is having securing financing to construct the La India project in Mexico.
"The board has conducted an internal review of strategic options going forward against the backdrop of a gold price that has corrected approximately 40% from its all time high 3 years ago and the lack of appetite for equity financing in the junior gold exploration sector," it said in a statement.
Condor said the La India project would need between USD110 to USD169 million to construct, meaning if it had to go to market to raise the funds it would be "significantly dilutive to existing shareholders".
"Furthermore, there is no guarantee that either equity or debt financing for the construction of the mine and associated infrastructure can be secured on satisfactory terms," it added.
The next step at La India is to complete a definitive feasibility study, but the company said the cost of completing the study would not be in its best interest because it would be "unlikely" for that study to be fully recognised in the share price.
"Condor will continue with its strategy of de-risking the La India project by applying for an Environmental Impact Assessment Permit and securing the rural land, while continuing to show the upside of the project through a soil survey programme, a detailed structural geology study and completing an enterprise optimisation study on the reserves and resources in the pre-feasibility studies and pre-economic assessments," said Condor.
"One of the options being considered would be a possible offer for the company. Another option is for a joint venture or sale of one or more of the company's assets," it added.
It said another reason for not going forward with the definitive feasibility study was because if the company was to be acquired, the project and study would be reviewed by the buyer.
It also said any deal may involve its other project, El Salvador, which has four concessions and is also based in Mexico.
Condor Gold shares closed down 8.4% to 50.40 pence per share on Friday.
By Joshua Warner; [email protected]; @JoshAlliance
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