10th Sep 2015 08:49
LONDON (Alliance News) - Xtract Resources PLC on Thursday said it has agreed revised terms with Auroch Minerals NL on the acquisition of the Manica gold project in Mozambique.
Xtract and Auroch struck a deal in June under which Xtract will pay a total of USD12.5 million to acquire the mine, comprising USD4.5 million in cash, USD6.5 million in Xtract shares and USD1.5 million to be paid to project-related creditors.
Since then, however, Xtract's shares have fallen in value and it has renegotiated the terms of the deal to minimise the dilution effects for its existing shareholders.
Under the revised terms, the cash portion of the consideration will now be USD7.0 million, with USD2.0 million to be paid three months after completion and to be settled via project finance, and a further USD1 million to be retained by Xtract to cover any tax liabilities on the capital gain due on the disposal of the asset.
Under the new terms, Xtract will issue Auroch 1.03 billion shares to the value of USD4.0 million, giving the share a value of around 0.39 pence per share. Xtract shares were down 1.0% to 0.2575 pence on Thursday.
"We are pleased to have renegotiated the terms of this acquisition in order to mitigate and protect unnecessary downside dilution to Xtract's shareholders," said Xtract Chief Executive Jan Nelson.
Nelson added the company is holding advanced talks with lenders about financing the construction of Manica and said the project remains on track to start operations in 16 months.
By Sam Unsted; [email protected]; @SamUAtAlliance
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