16th Dec 2015 08:13
LONDON (Alliance News) - Thor Mining PLC shares soared on Wednesday after striking a deal with an Australian company which may lead to the sale of its Spring Hill and Dundas gold projects for up to AUD3.5 million.
Thor shares were up 72% to 0.0411 pence per share on Wednesday morning.
Thor has signed an option agreement to sell its wholly owned subsidiary, TM Gold Pty, which owns the two gold projects in Australia to PC Gold Pty Ltd.
PC Gold will pay a AUD150,000 deposit within the next 21 days to obtain a 30-day option to acquire the subsidiary from Thor.
PC Gold will pay an initial AUD2.0 million, including that deposit, to acquire the initial 60% stake in the subsidiary, but "100% management control". To acquire the other 40% stake in the subsidiary, PC Gold will have to pay another AUD1.5 million within a 12 month window.
Thor has also managed to retain a royalty from the Spring Hill project through the deal.
Thor will receive AUD6.00 per ounce of gold produced from Spring Hill when gold prices are below USD1,500 per ounce. If gold prices exceed that amount, that royalty increases to AUD14.00 per ounce. To put that into perspective, gold was trading at around USD1,065 per ounce on Wednesday morning.
Thor said the deal will be advanced once PC Gold has received financing from specialist metal private equity fund RIVI Capital LLC, which is US-based.
Importantly, Thor will have to use some of the proceeds from the deal to pay off part of a AUD1.2 million loan secured against Spring Hill project. The balance will be used to progress the company's tungsten operations.
Thor did not state how much of the proceeds would be used to pay down the loan.
Thor also noted that the subsidiary that holds the two projects had capitalised expenditure of AUD6.3 million funded by loans from the company, which will be converted into equity once the deal is completed, meaning Thor will hold some form of stake in the subsidiary even after the sale to PC Gold.
"The sale of the Spring Hill and Dundas Gold Projects is a great result for Thor and will generate substantial cash upside for the Company in a challenging market. It also allows Thor to continue to focus on its core tungsten projects in Australia and the US," said Thor Chairman Mick Billing.
By Joshua Warner; [email protected]; @JoshAlliance
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