7th Mar 2016 08:10
LONDON (Alliance News) - Metminco Ltd Monday said it has agreed to purchase a subsidiary which holds the Quinchia gold project in Colombia, which will now be its main focus throughout 2016.
The miner said it has signed a heads of agreement with RMB Australia Holdings Ltd to acquire Minera Seafield SAS, which wholly owns the gold project.
Metminco would issue RMB with 50.0 million shares at a price of 0.5 Australian cents each if the agreement becomes binding.
On completion of the deal, Metminco would then issue RMB with another 350.0 million shares at the same issue price, and pay around AUD500,000 to RMB for the costs of maintaining the operation whilst the deal is being finalised.
A year after the deal has been completed, Metminco will then pay RMB AUD1.0 million in cash and another AUD1.0 million two years after the deal has been completed. A third payment of AUD3.0 million will be after 36 months. A fourth payment of AUD2.0 million will then be made 48 months after the deal is completed.
Those last two payments will be made earlier if Metminco makes a decision to mine the operation.
Metminco said it will also pay a maximum of AUD7.0 million in royalty payments to RMB from operating cashflows.
Overall, Metminco is paying a total of AUD7.0 million in cash for the deal, in addition to the initial AUD500,000 and the AUD7.0 million in potential royalty payments, plus the 400.0 million shares.
Those 400.0 million shares would represent around 11.8% of the company's enlarged issued share capital.
Metminco said the deal "paves the way" for the company to become a gold producer with "strong cashflows" to fund exploration and production growth plans.
The Quinchia gold project has a mineral resource of 2.8 million ounces of gold within its 6,042 hectares of concessions. The project also has applications for further concessions being processed covering a further 3,792 hectares.
Metminco said there is a near term development opportunity at one of the deposits which contains 1.9 million ounces of gold and 3.8 million ounces of silver.
"The near term gold production opportunity at the Miraflores project combined with the drill ready gold/copper porphyry system identified at Tesorito, makes the Quinchia Portfolio a very attractive acquisition for Metminco," said Managing Director William Howe.
By the end of this year, the miner hopes to complete a feasibility study for the Miraflores deposit and an environmental impact assessment.
Metminco shares were down 5.3% to 0.251 pence per share on Monday morning, shortly after market open.
By Joshua Warner; [email protected]; @JoshAlliance
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