TIDMHER
RNS Number : 4454F
Herencia Resources PLC
27 July 2016
Herencia Resources plc
("Herencia" or "the Company")
Herencia Completes Paguanta Sale
Summary
Ø The Company has executed a formal purchase agreement
("Agreement") with Golden Rim Resources Limited ("GMR") for the
sale of its 70% ownership in the Paguanta zinc, silver and lead
Project in northern Chile.
Ø As previously announced (see the announcement dated 10 May
2016), the total consideration is US$2.3 million in cash and GMR
equity, and GMR agreeing to pay up to US$2.1 million (approximately
GBP1.5 million) towards various contingent liabilities.
Ø To-date GMR has paid Herencia a total of US$0.227 million,
being US$0.127 million upon execution of the initial conditional
term sheet and US$0.1 million upon execution of formal
documentation (as set out in the announcement dated 15 June
2016).
Ø The consideration will be paid in tranches, with:
o US$0.8 million paid today;
o US$0.413 million to be paid within 30 days of execution of the
Agreement, subject to the payment of specified creditors; and
o US$0.05 million to be paid within 60 days of execution of the
Agreement,
Ø A final amount US$0.8 million in GMR equity in the event that
a decision to mine is made at Paguanta.
Ø GMR will pay all taxes associated with the transaction not to
exceed US$0.05 million.
Ø Golden Rim Resources Limited is a public company quoted on the
Australian Securities Exchange ("ASX").
Herencia Resources plc (AIM: HER) is pleased to announce that it
has completed the sale of its 70% equity in the Paguanta Project.
On 10 May 2016, the Company announced they had entered into a
transaction ("Proposed Transaction") with Golden Rim Resources
(ASX: GMR) under which the Company would sell all of the issued
shares in Paguanta Resources (Chile) SA ("PRC"), a wholly owned
subsidiary of Herencia to GMR. PRC holds 70% of the shares in
Compania Minera Paguanta S.A. ("CMP") which holds mineral
concessions at the Paguanta silver-lead-zinc-copper project in
northern Chile.
Completion under the Proposed Transaction was due to take place
prior to 4 July 2016, however due to delays with the flow of
information; the parties agreed to extend the date of completion to
no later than 29 July 2016. On 15 June 2016, the Company made a
further announcement with the execution of formal documentation
following which GMR provided Herencia with the second tranche of
the deposit, totalling US$0.1 million.
Transaction Details
As previously announced (-see announcement dated 10 May 2016),
the total consideration for the sale of the Paguanta Project is
US$2.3 million, with GMR agreeing to pay up to an additional US$2.1
million (approximately GBP1.5 million) towards various contingent
liabilities.
The US$2.3 million is payable in $1.5 million cash and a total
of US$0.8 million in fully paid ordinary GMR shares (Shares) to
Herencia at an issue price equal to the 20 day volume weighted
average price, in the event a decision to mine is made at
Paguanta.
The cash consideration under the transaction is payable in
instalments and at the signing of the Agreement, Golden Rim has
paid a total of US$1.027 million (including the two deposits
previously paid). Prior to the next instalment of US$0.423 million,
payable within 30 days of execution of the Agreement, all
outstanding creditors in PRC and CMP are required to be paid. A
final amount of US$0.05 million is payable within 60 days of
execution of the Agreement.
The Directors believe these funds will be sufficient to satisfy
the Company's working capital requirements for the foreseeable
future and these funds will be used to repay creditors, to advance
the Company's remaining assets and for working capital purposes.
Further updates will be provided in due course.
A full outline of the transaction terms and disclosures relating
to this transaction were detailed in the announcement dated 10 May
2016.
Managing Director, Graeme Sloan, commented:
"The sale of Paguanta is an important step forward for the
Company given our requirements for funds and our need to focus 100%
focus on our Picachos copper project in central Chile. Even though
the Board believes the Paguanta Project has a great deal of upside,
they also believed that the decision to divest of Paguanta at this
time is the right one for shareholders.
Over the past few weeks, the price of copper has improved and
markets in general appear a little more open to investing in
resource stocks, although still very challenging at the moment. The
Picachos Project has enormous potential as demonstrated in our two
drilling campaigns and surface and underground geological work
completed to date. Given this, our aim is to continue negotiations
with parties around our Picachos project whilst developing a
feasible production strategy to meet current market conditions and
commodity prices.
Finally, on behalf of all Herencia shareholders we wish Golden
Rim Resources every success with Paguanta and if an opportunity
should present itself we would look forward to working with them in
the future".
About Herencia
Herencia Resources plc, is an AIM quoted exploration and
development company operating in Chile. In addition to the Picachos
Copper Project, the Company also has the Guamanga Copper Project.
The Company's corporate office is located in Perth and the main
technical and management office is located in Santiago, Chile where
it has been operating for over eight years.
About Paguanta
Paguanta is located in the north of Chile approximately 190
kilometres north-east of the coastal city of Iquique and 30
kilometres west of the Chile-Bolivia border. It is on the north end
of the Oligocene Porphyry Copper Belt of Chile that includes the
world class deposits of Escondida, Chuquicamata, Collahuasi and
Cerro Colorado. Cerro Colorado is a large operating copper mine,
operated by BHP Billiton, and is located approximately 35
kilometres south of Paguanta.
For further information please contact:
Graeme Sloan, Herencia Resources plc +61 8 9481 4204
Katy Mitchell, WH Ireland Limited (NOMAD) +44 161 832 2174
Jon Belliss, Beaufort Securities Limited (UK) +44 207 382 8300
References in this announcement to exploration results and
potential have been approved for release by Mr Graeme Sloan (BAppSc
Mining Engineering WASM) who has more than 20 years relevant
experience in the field of activity concerned. Mr Sloan is a Member
of the Australasian Institute of Mining and Metallurgy. Mr Sloan
has consented to the inclusion of the material in the form and
context in which it appears.
Further background details on the Company can be found at
www.herenciaresources.com
**ENDS**
This information is provided by RNS
The company news service from the London Stock Exchange
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