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Ashanti signs letter of intent on C$3.8M sale to Desert Gold

Last updated: 02:50 12 Mar 2019 AEDT, First published: 23:33 11 Mar 2019 AEDT

A map of Mali
The preliminary agreement would consolidate adjacent property rights and holdings in Mali

Ashanti Gold Corp (CVE:AGZ) (OTCMKTS:GULSF) said Monday that it has signed a letter of intent regarding its sale to Desert Gold Ventures Inc (CVE:DAU) in a stock deal valued at C$3.8 million.

The proposed merger would consolidate adjacent property rights and holdings in a prospective area of Mali, the companies said in a statement.

Under the terms of the letter of intent, 0.2857 share of Desert Gold would be exchanged for each Ashanti share. The deal implies consideration of C$0.0514 per Ashanti share, based on Desert Gold’s closing price on the Toronto Venture Stock Exchange on Friday.

READ: Ashanti Gold closes financing, raises more than C$500,000 to bolster Mali exploration program

The proposed deal carries a premium of 28.5% based on Friday’s closing price of Ashanti shares for a value of C$3.8 million. Ashanti shareholders would end up with 31% of the combined entity. 

Shares of Vancouver-based Ashanti traded at C$0.04 in Friday’s Canadian trading. The stock of Delta, British Columbia-based Desert Gold fetched C$0.18 on Monday.

The parties have until April 15 to enter into a definitive agreement. They have set a long-stop date of September 30, meaning such a deal would terminate if not closed by that time.

“This transaction is an exciting opportunity for Ashanti shareholders to be a part of a bigger land package that encompasses both major geological structures in the area,” Ashanti CEO Tim McCutcheon said. “Larger scale in an area of multiple gold mineralization zones lowers risk and raises the attractiveness of the combined land package for investors.“

Last month, Ashanti said it had raised funds through a private placement for exploration at its Kossanto East property in Mali.

–This story was updated to give the latest trading price–

Contact Dennis Fitzgerald at dennis@proactiveinvestors.com

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