30th Jan 2015 08:23
LONDON (Alliance News) - Herencia Resources PLC Friday said it has signed an option agreement to sell the La Serena exploration project in Chile for up to USD4 million after identifying it as "non-core" in the company's future development plans, and said it will retain a royalty on the project.
The option agreement has been signed with Cuprum Resources Chile Limitada, which is part of the B&A Mineracao group.
Under the agreement, Cuprum has paid an initial non-refundable payment of USD150,000 to Herencia. If Cuprum elects to proceed and fully exercise its options to acquire the project, it will pay a further USD350,000 in 12 months time, USD500,000 after 24 months and USD3 million after 36 months, said the company.
La Serena has a current book value of GBP223,900, said Herencia.
Herencia said it was selling the project as the greenfield site requires drilling and expenditure commitments to test the play, and under the company's current development plan, La Serena was deemed "non-core to its future plans."
The company said the option agreement will provide short to medium term shareholder value, and longer term value through the 0.8% royalty that Herencia will retain on the La Serena project.
Herencia said it is also in discussions with various parties to potentially set up a joint venture for the Guamanaga prospect, also in Chile.
"Not only will we receive cash and potentially participate in any upside through an NSR royalty, we will also not incur any ongoing project expenditure," said Managing Director Graeme Sloan.
"Whilst the focus has been on advancing the Picachos Project toward production by the end of the year, we continue to seek value-add opportunities for our shareholders wherever possible, this agreement is one such opportunity," he added.
Herencia shares were up 10% to 0.220 pence per share on Friday morning, one of the best performers in the AIM All-Share.
By Joshua Warner; [email protected]; @JoshAlliance
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