Richland Resources Ltd (LON:RLD) told investors it has entered into an option deal to sell the Capricorn sapphire project to Fura Gems Inc (CVE:FURA), which if exercised will effectively leave the AIM-quoted firm as a cash shell.
Fura is to pay a C$150,000 option fee - of which C$125,000 must be loaned by Richland to the Capricorn subsidiary interest-free - and, upon exercise, a further US$185,000 of cash would be paid along with 4.85mln Fura shares. Some additional future payments would also be due.
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In a statement, Richland acknowledged that it has for some time been engaged in talks with potential strategic investors to secure funds to restart production at the Capricorn mine or alternatively conclude talks to sell the asset.
Looking ahead, the company said: “The proposed disposal will constitute a fundamental change of business for the company and will therefore require the approval of shareholders at a duly convened general meeting.
“Following successful completion, Richland will become an AIM Rule 15 cash shell and, as such, will be required to make an acquisition, or acquisitions, which constitutes a reverse takeover under AIM Rule 14 within six months from the completion date.”
Richland shares rose 12.5% to trade at 0.09p following the announcement.