East African gold exploration and development company Nyota Minerals has entered into a conditional agreement to sell 75 percent of the issued share capital of its subsidiary Nyota Minerals Ethiopia to exploration company Kefi Minerals. The subsidiary owns 100 percent of the ...
Tulu Kapi gold project, which is located in western Ethiopia, 28km east of Ayra-Gulliso town in the Oromia Regional State. It also owns its proximal exploration licenses, and the sale was in line with Nyota's stated strategy of identifying a partner for the development of the gold project, as was announced in May. The property lies in the Tulu Kapi-Ankore license area and has a surface area of 8.44km2.
Nyota would retain a participating 25 percent interest in Tulu Kapi and the proximal exploration licenses, as well as a 100 percent stake in the Northern Block exploration properties.
The sale consideration would be satisfied by the payment of 1 million pounds in cash, as well as the issue of up to 116.67-million ordinary shares in Kefi, at an agreed price of 3 pounds a share.
Kefi Minerals had conditionally raised 4.5 million pounds through the placing of 225 million new ordinary shares at a price of 2 pounds a share to fund the cash element of the consideration, as well as its 75 percent share of the corporate and technical costs of the subsidiary.
Nyota stated that its 25 percent beneficial interest in the subsidiary remained undiluted by any further investment made by Kefi until a revised Joint Ore Reserves Committee-compliant resource estimate for Tulu Kapi had been approved and published, adding that this was expected to take place in the first quarter of 2014.
Meanwhile, a new development and mining plan would be devised for Tulu Kapi with a view to development in 2015, based on a production plan in the order of 85 000 tons per year.
Nyota would also look to raise funding for its share of the ongoing development costs at Tulu Kapi and to carry out a focused exploration programme to advance the Northern Blocks.
"Procuring a partner for the Tulu Kapi project has been essential to maintaining and developing the company's key assets in the current difficult market conditions for junior resource companies," Nyota CEO Richard Chase said, adding that he would continue as a director of Nyota Minerals Ethiopia to ensure that Nyota's interest in the project and operations in Ethiopia would remain unaffected.
"I believe this agreement diversifies Nyota's interests and, now that our capital commitments towards Tulu Kapi have been largely alleviated and the company's overheads significantly reduced, we have multiple opportunities for value uplift.
"Initially, we will refocus on the significant discoveries made on our Northern Block exploration tenements but there are also other mineral exploration opportunities that we may pursue in Ethiopia and elsewhere," he concluded.