THE BOURSE WHISPERER: Dragon Mountain Gold has announced that its majority owned subsidiary, Warrior Advance Pty Ltd has entered into a conditional agreement to sell 100 per cent of the issued shares in its subsidiary that holds the Lixian gold project in China.
The project is to be sold to ZiJin Mining Group Co Ltd for consideration of $175,000,000.
Dragon Mountain said it expected its share of the consideration will be approximately $150,000,000.
“Zijin has recognised the quality and size of the Lixian gold project and it gives the ability to consolidate the ground holdings and make a much larger mining operation that will complement the mining operation and growth that exist within Zijin,” Dragon Mountain Gold said in its announcement to the ASX.
Zijin is a Shanghai and Hong Kong listed public company with a market capitalisation of more than $US12 billion and extensive interests across a broad range of commodities, including gold, copper, zinc, lead, tungsten and iron ore.
The terms of the transaction have Dragon Mountain and Warrior entered into a conditional agreement to sell 100 per cent of the issued shares in Long Province Resources Limited, a Hong Kong incorporated company, to Zijin and its subsidiary.
The $175,000,000 consideration is payable on completion of the transaction.
The transaction is conditional on the following terms:
a) Approval from shareholders of the company;
b) Effective approval from the Australian regulatory authorities, including the Australian Foreign Investment Review Board, and the ASX Limited;
c) Effective approval from the government of the People’s Republic of China or its authorised relevant department; and
d) Warranties provided by the Company are true and accurate in all respects on and as of Completion with the same force and effect as though made on and as of Completion.
“This sale of the Lixian gold project is an exciting step in the future of DMG,” Dragon Mountain Gold chairman Robert Gardner said in the company’s announcement to the Australian Securities Exchange.
“There are a number of steps required prior to completion and the board will keep shareholders informed as these progress.
“The sale, when completed, would leave DMG in a very strong cash position.
“The proceeds of the sale would allow the Company to actively pursue other investment opportunities in the resources industry.
“The directors will also consider other capital management alternatives with respect to the proceeds.”