7 Nov 2016 07:00
7 November 2016
Sovereign Mines of Africa PLC
("SMA" or "the Company")
Farm-out of Guinean Gold Asset
Sovereign Mines of Africa PLC (AIM:SMA), is pleased to announce that it has entered into an agreement with Volcanic Metals Corp. (TSXV:VOL) ("Volcanic") to farm-out its 75% interest in the Mandiana Gold Project in the Republic of Guinea, West Africa.
The farm-out will be effected by the sale of all the outstanding share capital of Sovereign Mines of Africa Ltd. ("SMA Ltd"), a wholly-owned subsidiary of the Company and 75% owner of a series of mining permits associated with the Mandiana Gold Project. The transaction remains subject to a number of conditions. In consideration, SMA will receive common shares in Volcanic Metals Corp representing 9.9% of the outstanding share capital of Volcanic.
Reasons for the Farm-out
The Board has been conducting a strategic review of the Company's assets and activities over the preceding 10 months which has included the decision to not continue to fund the development of its Guinean assets. The Company currently carries its Guinean assets in the books at nil value, having written down the assets in the annual results for the year ended 31 December 2015. In the year ended 31 December 2015 SMA Ltd incurred losses of £162,317. The farm-out of the Mandiana Gold Project forms part of an overarching strategy to enhance shareholder value, it is the Company's intention to hold its interest in Volcanic Metals Corp for such time that maximises shareholder value.
Effect of the Farm-out
The farm-out of the Company's 75% interest in the Mandiana Gold Project constitutes a cessation of all of the Company's existing trading business pursuant to Rule 15 of the AIM Rules for Companies ("AIM Rules"). The Company will on completion of the farm-out become an AIM Rule 15 cash shell, pursuant to which it must make an acquisition or acquisitions which constitute a reverse takeover under AIM Rule 14 within six months, failing which the Exchange will suspend trading in the Company's shares pursuant to AIM Rule 40.
Potential Acquisition
The Company has entered into an exclusivity agreement to acquire new assets in the mining industry, and is carrying out detailed due diligence on these. Further announcements will be made in due course.
Giles Clarke, Chairman of Sovereign Mines of Africa said:
"This is an important step for the Company and realizes immediate value for shareholders whilst retaining an interest in the future of the Mandiana Gold Project. The Company is in a transitional period whilst we execute our new vision following a detailed strategic review which includes a potential acquisition within the mining industry. We look forward to updating our shareholders further on these activities in due course."
Enquiries:
SOVEREIGN MINES OF AFRICA PLC
Giles Clarke, Chairman - c/o Camarco +44 20 3757 6983
Rupert Street, CEO
SHORE CAPITAL - NOMINATED ADVISER & BROKER
Toby Gibbs - Corporate Finance +44 207 408 4090
Jerry Keen - Corporate Broking
CAMARCO
Billy Clegg / Gordon Poole +44 20 3757 6983
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.