4th Jul 2016 12:00
LONDON (Alliance News) - Herencia Resources PLC Monday said it is continuing to operate using minimal funds and stressed there is no guarantee that it will be able to last past the end of this month after the company said its all-important deal with Golden Rim Resources has been delayed.
The company has been scrambling for funds whilst trying to finalise and complete the sale of its stake held in the Paguanta project in northern Chile and was set to run out of funds last month, but the miner managed to cling on after Golden Rim provided the second tranche of the deposit.
That USD100,000 tranche has allowed Herencia to live on, but on Monday the miner warned one again that the company will not last long - with those funds to last until "at least the end of July" - adding that there is "no guarantee" that it can continue trading past that point.
Notably, Golden Rim has already provided a USD120,000 deposit and that second tranche of USD100,000 was only due to be paid by Golden Rim once a formal deal had been signed, suggesting the company is committed to purchasing the asset from Herencia.
The second tranche was secured on June 15 after formal execution of the documentation for the sale of the assets
The news will be of real concern to shareholders as Herencia said the sale of Paguanta to Golden Rim, which was set to be completed on Monday, has been pushed back to July 29, meaning Herencia will be cutting it fine as any delay may mean the company will not have the funds to continue.
Herencia said the date has been pushed back because of the "delay with the flow of information", without providing any further details.
"Golden Rim has notified the company they are well advanced in their due diligence investigations, with technical due diligence complete and only a few financial and legal due diligence matters remain outstanding, including receipt of the audited accounts of Compania Minera Paguanta and Paguanta Resources (Chile) SA," said Herencia.
Paguanta Resources is the wholly owned subsidiary of Herencia that is set to be sold to Golden Rim, which in turn holds a 70% stake in Compania Minera Paguanta, the holder of the Paguanta project itself.
"There can be no guarantee that the proposed transaction will complete. Further updates will be provided by the company as the due diligence is finalised," said Herencia.
Herencia struck the deal to sell its stake in Paguanta in May and under the terms of the deal, Herencia is set to receive between USD1.5 million and USD2.3 million in total for the asset in a potential mix of cash and equity.
Herencia shares were suspended on Thursday after it failed to reprot its results for the 2015 on time, and the company said that was caused by delayed receipt of information from its Chilean subsidiaries.
By Joshua Warner; [email protected]; @JoshAlliance
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