THE BOURSE WHISPERER: Xanadu Mines has executed a terms sheet with private Canadian company Temujin Mining Corp to acquire the Oyut Ulaan copper and gold project in the South Gobi region of Mongolia via the purchase of Temujin’s wholly-owned subsidiary Vantage LLC.
Xanadu will negotiate a definitive agreement to purchase Oyut Ulaan following the completion of satisfactory due diligence and the receipt of Temujin shareholder approval.
Source: Company announcment
“Once definitive documentation is finalised and a mining licence issued on the project, which will earn Xanadu an initial 25 per cent project interest, the Board of Xanadu will propose the purchase of the remaining 75 per cent of the project be approved at a General Meeting of shareholders,” Xanadu Mines said inits ASX announcement.
“This process is expected to be completed next quarter however either party will have the right to terminate the Terms Sheet should the definitive documents not be entered into within 30 days.”
Payment for the acquisition will include the issue of new shares in Xanadu comprising 3.95 million shares and A$4.25m of shares based on a price equal to the 15 day volume weighted average price (VWAP)as calculated on the day of the General Meeting.
Temujin will also receive a one for two option package exercisable at a strike price equal to a premium of 30 per cent to the 15 day volume weighted average price VWAP referred to above with an expiry date of 2 years.
The final number of shares issued will depend on Xanadu’s share price prior to the date of the General Meeting.
Should Xanadu define a JORC-compliant resource over a mineable area of the project of at least 90 million tonnes at an average 1 per cent copper equivalent an additional 15 million shares will also be issued to Temujin subject to the completion of a favourable pre-feasibility or scoping study.
As part of the initial 25 per cent earn in Xanadu must cover expenditures to complete hydrology, environmental and assay reports on the project area.
Xanadu is committed to spend a minimum of $5 million on the project in the 30 months after the mining licence is granted.
Xanadu said it considers the impending acquisition of Oyut Ulaan to be a significant addition to the company’s existing copper exploration licences in a region which hosts extensive porphyry copper and copper skarn deposits.