Finalised Sale of 50% Interest in Georgian Assets

RNS Number : 0582B

Empire Metals Limited

07 June 2021

 

Empire Metals Limited / AIM: EEE / Sector: Natural Resources

7 June 2021

Empire Metals Limited ('Empire' or the 'Company')

Conclusion of Sale of 50% Interest in Georgian Copper & Gold

Empire Metals Limited, the AIM-quoted resource exploration and development company, is pleased to announce that it has concluded an agreement to sell its 50% holding in Georgian Copper & Gold JSC for an all-cash consideration of US$3.3 million. The proceeds will put Empire in a strong financial position to continue to create shareholder value principally from its Eclipse and Central Menzies Gold Projects in Western Australia.

Sale Agreement

On 26 October 2020, the Company announced that it had entered into a sale and purchase agreement with Candelaria Mining Corporation ('CAND') for the sale of the Company's wholly owned subsidiary GMC Investments Limited ('GMCIL') (the 'CAND Transaction'), for an all-shares consideration.  GMCIL is the owner of a 50% interest in JSC Georgian Copper and Gold ('GCG'), which in turn holds the rights to copper-gold projects under a 30-year mining concession in Georgia. This transaction was subject to a number of conditions including a Right of First Refusal ('ROFR') held by Caucasian Mining Group ('CMG'), the Company's partners in Georgia and the owners of the other 50% of GCG.

CMG advised the Company that it intended to exercise its ROFR but due to certain aspects of the CAND Transaction being directly related to CAND being a listed company, it was not possible to directly match the CAND offer and to provide the Company with confidence that the Company would receive the full consideration included in that offer. However, this also prevented the Company from proceeding with the CAND Transaction.

As a result, the parties commenced negotiations and have now entered into a Sale and Purchase Agreement for the sale of the Company's 50% interest in GCG to CMG for a single cash payment of US$3.3 million.

The Company and CAND have agreed to mutually terminate the agreement announced on 26 October 2020.

The Board has concluded that the CMG offer is the best option available to the Company and one that will allow Empire to move forwards from the untenable situation in Georgia and focus its resources and efforts on the Company's new strategy of exploration and development principally within the Western Australian gold sector. 

Mike Struthers, Director of Empire Metals, said: "After our entry into Georgia in 2015 and two years of successful exploration we had created a good foundation for growth in the country, but since early to mid-2018 external factors started to turn against us.  Despite sustained and determined efforts by the Company on many different fronts for nearly three years to unlock the challenges being faced, it is evident that the joint venture in Georgia is no longer sustainable. Furthermore, although the Company has appealed the decision by the Mining Agency to withdraw the majority of the original licence area there is little confidence in a successful outcome; and the sale and purchase agreement with Candelaria Mining cannot be executed because although CMG indicated their desire to exercise their ROFR, the Company had no confidence in receiving the full consideration offered by Candelaria and this dispute can only be settled through lengthy and expensive arbitration.

"The Board has therefore concluded the best outcome for shareholders is to bring this chapter in the Company's history to a close and to focus our resources and efforts elsewhere. Our efforts in Australia are already bearing fruit, and the recent addition of the very prospective Central Menzies Project has further strengthened our presence in the gold sector in WA and provided a real platform for growth. This injection of capital will ensure we are well funded for further exploration and project development works at our Eclipse Gold Project; for the initial work programme at our Central Menzies Gold Project; and, if justified, also funded to exercise the option at Central Menzies. I and the rest of the Board look forward to supporting our new MD Shaun Bunn as we develop real value through our assets in Australia."

Transaction Details

CMG will pay US$3.3 million cash to the Company for its 50% interest in GCG with completion expected on or around 14 June 2021.

The Company will also pay a fee of US$250,000 to an unrelated third party in Georgia who has acted as an adviser and assisted in bringing the CMG negotiations to fruition. This fee is payable on completion and consists of US$100,000 in cash and US$150,000 to be satisfied by the issue of 3,995,238 new ordinary shares in the Company at a price of 2.65p, (the 30-day VWAP as at the date of signing the Sale and Purchase Agreement between GMCIL and CMG).

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014, as incorporated into UK law by the European Union (Withdrawal) Act 2018, until the release of this announcement.

**ENDS**

For further information please visit www.empiremetals.co.uk  or contact:

Shaun Bunn	Empire Metals Ltd	Company	Tel: [phone]
Mike Struthers	Empire Metals Ltd	Company	Tel: [phone]
Ewan Leggat	S. P. Angel Corporate Finance LLP	Nomad & Broker	Tel: [phone]
Adam Cowl	S. P. Angel Corporate Finance LLP	Nomad & Broker	Tel: [phone]
Damon Heath	Shard Capital Partners LLP	Joint Broker	Tel: [phone]
Susie Geliher	StBridesPartners Ltd	PR	Tel: [phone]
Cosima Akerman	St Brides Partners Ltd	PR	Tel: [phone]

About Empire Metals Limited

Empire Metals' primary focus is on the Eclipse and Central Menzies gold projects in Western Australia.  Empire owns 75% of Eclipse and has the option to acquire 75% of Central Menzies, with a right to acquire a further 25%.  Both projects have historical workings within the licences and are highly prospective.

Empire also holds a portfolio of three precious metals projects located an historically high-grade gold production region comprising the Rotgulden, Schonberg and Walchen prospects in central-southern Austria. 

The Board continues to evaluate opportunities through which to realise the value of its wider portfolio and reviews further assets which meet the Company's investment criteria.

 

 

END

 

 

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