SEMAFO Inc. today announced having entered into a heads of agreement with Middle Island Resources Limited (ASX: MDI) for the sale of a 100% interest in African GeoMin Mining Development Corporation Limited (“AGMDC”). AGMDC, a wholly-owned indirect subsidiary of SEMAFO Inc., holds an 80% interest in Société des Mines du Liptako (SML) S.A. (“SML”), owner of the Samira Hill gold mine in Niger. The Government of Niger owns the remaining 20% interest in SML.
The purchase price includes a cash payment of US$1.25 million and a fixed net smelter return (“NSR”) royalty of 1.2% on gold sold from the Samira Hill plant payable by Middle Island Resources to SEMAFO. The NSR is payable only if the spot price of gold is at or greater than US$1,450 per ounce, and is capped at US$12 million.
Closing of the transaction is subject to the following conditions:
- Grant of substitute exploration permits to Middle Island Resources over the land presently the subject of exploration permits located in the vicinity of the Samira Hill plant, which Middle Island Resources is currently earning an interest in.
- Completion of an AUD$5 million equity capital raising by Middle Island Resources.
- Completion of mutually satisfactory transaction documents.
- Completion of satisfactory legal and financial due diligence by Middle Island Resources.
- Obtaining all required governmental and regulatory approvals.
- Transfer by SML to SEMAFO of certain rolling stock and mining equipment.
Subject to fulfillment of the above conditions, closing of the transaction is anticipated to take place on or prior to September 30, 2013. Each party has a right to terminate the heads of agreement prior to closing the transaction.
SEMAFO is a Canadian-based mining company with gold production and exploration activities in West Africa. The Corporation currently operates three gold mines: the Mana Mine in Burkina Faso, the Samira Hill Mine in Niger and the Kiniero Mine in Guinea. SEMAFO is committed to evolve in a conscientious manner to become a major player in its geographical area of interest. SEMAFO’s strategic focus is to maximize shareholder value by effectively managing its existing assets as well as pursuing organic and strategic growth opportunities.