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(Alliance News) - MetalNRG PLC on Thursday said it has entered into a variation agreement with Lake Victoria Gold Ltd ahead of its purchase by MetalNRG.
Lake Victoria Gold is the operator of the Imwelo project in Tanzania, which has a resource estimate of 291,600 ounces of gold. This estimate includes resources from PML 2637, which Lake Victoria Gold has an option agreement to acquire for USD50,000.
However, the counter party to Lake Victoria Gold for the option agreement has died. The family members who inherited the option agreement have been contacted and negotiations are underway to agree similar terms, but MetalNRG noted that this will take some time.
As a result, both parties have agreed to remove all reference to the mineral resources associated with PML 2637 from the proposed acquisition. This amounts to a 90,000 ounces reduction in contained gold.
The UK-based natural resources company said the potential transaction consideration will remain at 750.0 million shares, but will be transferred in two tranches and MetalNRG will withhold 34.1 million of its shares for a period of six months. The value of each MetalNRG share in the deal is GBP0.008.
MetalNRG shares were trading 5.0% higher in London on Thursday at 0.87 pence each.
Looking forward, MetalNRG said it is committed to working towards achieving production from the Lake Victoria Gold assets within 10 to 12 months from the closure of the purchase of Lake Victoria Gold.
"We continue to be satisfied that the business opportunity from the Lake Victoria Gold transaction remains valid for MetalNRG and that the questions around the option agreement on PML 2637 will be resolved in the New Year," said Chief Executive Rolf Gerritsen.
"We are pleased that the Lake Victoria Gold board has recognised the situation and worked with us to find a suitable commercial solution to the changes and look forward to working with Lake Victoria Gold on completion," added Gerritsen.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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