RNS16 Apr 2018 08:53
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Cradle Arc PLC (CRA)
Cradle Arc PLC
Option Agreement for a JV and/or Sale of Luiri
RNS Number : 9462K
Cradle Arc PLC
16 April 2018
Cradle Arc plc / EPIC: CRA.L / Market: AIM / Sector: Mining
16 April 2018
Cradle Arc plc
("Cradle Arc", the "Company" or, together with its subsidiaries, the "Group")
Option Agreement for a Joint Venture and/or Sale of Luiri Gold Mines Limited
Cradle Arc (AIM: CRA), the African focused base and precious metals exploration and production company, is pleased to announce that it has today entered into an option agreement (the "Agreement") pursuant to which it has granted Singa Holdings Zambia Private Limited ("Singa") an option to establish a joint venture and/or an option to acquire the entire issued share capital of Luiri Gold Mines Limited ("Luiri"), the Company's wholly owned subsidiary, which holds the Matala and Dunrobin gold assets in Zambia.
Highlights:
� Cradle Arc has granted Singa an exclusive option to acquire the entire issued share capital of Luiri for a total cash consideration of US$2.5 million (the "Share Option"), which expires on 1 July 2018, unless otherwise extended.
� In the event the Share Option is exercised and with effect from completion of the acquisition of Luiri, Cradle Arc will receive a royalty of 1.5% of gross revenue generated from the Matala and Dunrobin gold assets, up to a maximum aggregate amount of the Net Present Value of US$2.5 million discounted at 8%.
� Cradle Arc has also granted Singa an exclusive option which expires on 30 June 2018, unless otherwise extended, to form a joint venture for the operation of the Matala and Dunrobin gold assets (the "JV Option"). In the event the JV Option is exercised, any such joint venture terminates upon the commencement of commercial gold production. In the event that Singa elects to exercise the JV option, Cradle Arc has the right to require Singa to exercise the Share Option.
� An option fee of US$30,000 (the "Option Fee") is payable by Singa to Cradle Arc in three equal monthly tranches, commencing on the date of the Agreement.
Kevin van Wouw, CEO of Cradle Arc, said:
"The development of our Zambian gold assets has long been an important goal for the Company. We are, however, extremely mindful of the potential dilution that raising equity funds for the development of Matala could have on existing shareholders at the Company's current share price, and we therefore consider that this partnership with Singa represents the best path towards potential production in the near to mid-term.
"Should the Share Option be exercised, the total amount payable to Cradle Arc would, in our view, represent fair value given the project's current stage of development and will support the Company's future strategy. On