Arc Minerals PLC (LON:ARCM) has unveiled plans to sell its entire 99.43% interest in Casa Mining Limited to Canadian private equity group, Century Capital Management Ltd for a total consideration of up to US$9.8mln.
In a statement, the company said the initial consideration will comprise a cash consideration of US$1.8mln and will have a significant positive impact on Arc's cash and balance sheet position.
It said it will also be entitled to receive a cash consideration of US$2.5mln payable in the event that the Minerals Resource Estimate for Casa increases to 6mln ounces during the five year period from the closing of the transaction, with an additional US$2.5mln payable on the resource increasing to 9mln ounces and a further US$3mln for the resource increasing to 12mln ounces.
The group said completion of the transaction is conditional on, final due diligence and is expected to close no later than 10 January 2020.
Casa is a private company which owns a 73.84% interest in the 3mln ounce inferred resource Akyanga gold deposit in the Democratic Republic of Congo (DRC).
The reported net book value of Arc's interest in Casa Mining and its subsidiaries, which own the Misisi gold assets, had a net book value of £21mln and incurred a loss of £163,000 for the year ended 31 March 2019 (from discontinued activities).
The cost to Arc of the shares being sold is £5.1mln ($6.5mln) against the gross consideration of $9.8mln representing a potential $3.3mln gain.
The company said the net proceeds of the disposal will be applied to exploration and development activities in Zambia and for general working capital purposes.
Major strategic milestone
Nick von Schirnding, Arc’s chairman commented: "This is a major strategic milestone for Arc. The transaction brings significant cash resources to Arc and at the same time removes ongoing opex. Crucially, it allows us to focus on our exciting Zambian copper development where we are making excellent progress both on drilling and commercially developing our plant.”
“I am delighted to have Century acquiring Casa - we have been working closely with Century over the past few months and I am encouraged by their future plans for the project. Excitingly for Arc, we have significant further upside potential as Casa grows in size.
“As I have set out many times, we are clear on our vision in turning Arc into a focused copper play - this is a major step forward and we will continue all efforts to dispose of the remaining non-core gold interest, namely Šturec in Slovakia," he added.