Mar 4 2011
South American Gold Corp. (OTCBB:SAGD) has announced it has entered into a definitive agreement to acquire privately-held Kata Enterprises Inc.
South American Gold is assuming operational control of Kata through a special shareholder meeting of Kata, and has the option to acquire an ownership interest of up to one hundred percent (100%) over the next 18 months.
Kata is seeking to acquire the rights under a mineral concession for the area referred to as the Santacruz Gold Project. The project comprises 1,843 hectares located in a well known gold-producing region in Southwest Colombia. South American Gold's technical teams began data review and compilation in December, and have been on-site since early January conducting their initial review of the project. Technical personnel are in the process of preparing a plan for the initial exploration activities. The acquisition agreement includes Kata Enterprises' database on the project area.
On December 20, 2010, South American Gold signed a Letter of Intent (hereinafter referred to as "LOI") to acquire up to one hundred percent of the shares of Kata. Kata owns 85% of Minera Nariño S.A.S., a gold exploration company in the department of Nariño located in Southwest Colombia. The LOI contemplated, after an initial due diligence period, the signing of a definitive agreement with an initial purchase of a twenty-five percent interest in Kata. This agreement furthermore contemplated South American Gold acquiring an additional seventy-five percent (75%) over an eighteen month period.
On February 25, 2011, South American Gold signed a definitive agreement to acquire twenty-five percent (25%) of Kata. This required an initial payment of $500,000, an additional $500,000 to be paid upon certain requirements being met, including registration of mining concessions in favor of Kata should it succeed in acquiring these rights, and the issuance of one million shares of restricted common stock of South American Gold.
Under the terms of the transaction, the South American Gold has the option to acquire the remaining seventy-five percent (75%) of the outstanding capital stock of Kata as follows:
South American Gold holds an option to acquire an additional twenty-five percent (25%) of the outstanding capital stock of Kata, which would result in its acquisition of an aggregate fifty percent (50%) of the outstanding capital stock of Kata, by paying on or before August 25, 2011 an additional $1 million and issuing to the seller an additional one million shares of South American Gold's common stock.
South American Gold holds an option that it could exercise to acquire an additional twenty-five percent (25%) of the outstanding capital stock of Kata, which would result in its acquisition of an aggregate seventy-five percent (75%) of the outstanding capital stock of Kata, by paying on or before February 25, 2012 an additional $1 million and issuing to the seller an additional one million shares of South American Gold's common stock.
South American Gold holds an additional option that it could exercise to acquire an additional twenty-five percent (25%) of the outstanding capital stock of Kata, which would result in its acquisition of an aggregate one hundred percent (100%) of the outstanding capital stock of Kata, by paying on or before August 25, 2012 an additional $1 million and issuing to the seller one million shares of South American Gold's common stock.
Under the terms of the transaction, South American Gold would pay an aggregate of $4 million and issue four million shares of its common stock in order to acquire one hundred percent (100%) of the outstanding capital stock of Kata. Further information on the transaction may be found in the Company's related 8-K filing with the SEC.
Raymond De Motte, CEO of South American Gold, stated: "We are pleased to have signed a definitive agreement that provides us the ability to acquire up to 100% of Kata Enterprises. We will also continue to actively seek additional mining interests in Colombia".
Source: South American Gold Corp.