Golden Rim Resources Ltd (ASX:GMR) is trading higher after selling its Kouri and Babonga gold projects in Burkina Faso, West Africa, for total consideration of US$15.5 million (A$22.3 million).
Funds will be received over four staged payments in the next 12 months with the money to be used to advance the 930,000-ounce Kada Gold Project in Guinea, where Golden Rim is making a strong community impact.
The company is waiting for its latest auger drilling and geophysical survey results at Kada to plan follow-up drilling, which will be aided by the cash from the sale of Kouri and Babonga.
Shares have been as much as 39.6% higher intraday to A$0.067.
Consideration
GMR will receive its first payment of US$600,000 (~A$860,000) from private mining company BAOR SARL within 15 business days and the second payment of US$5.4 million (~A$7.7 million) within 30 days.
BAOR will receive a project with an indicated and inferred mineral resource of 50 million tonnes at 1.3 g/t gold for 2 million ounces.
Kouri covers 325 square kilometres of highly prospective Birimian greenstones. Recent exploration has located several high-grade gold shoots.
Notably, first-pass aircore drilling conducted by GMR discovered gold mineralisation in bedrock over 1 kilometre.
The money will increase GMR’s cash reserves from the A$4.25 million it had in the bank at the end of the March quarter.
Sale to have immediate impact
Golden Rim’s managing director Craig Mackay is happy with the sale as it allows GMR to accelerate its work program at Kada.
“Securing this deal to divest our non-core Burkina Faso gold assets is a fantastic outcome for Golden Rim and our shareholders that looks to deliver immediate and impactful value from projects which are no longer part of our core operations," he said.
"While we have been focused on our transformational new Kada oxide gold project in Guinea, our projects in Burkina Faso have been sitting on the backburner and are attracting little market value.
“With a resource base of 2 million ounces of gold and extensive upside, the Burkina assets offer an exciting opportunity for an emerging Burkinabé mining company, such as BAOR SARL, and we wish the company much success with its plans.
“With the sale funds from these projects, we can accelerate our activities at Kada and ensure aggressive drilling and exploration to build our resource base without further dilutionary capital raising for the foreseeable future. This is a great outcome for our company and shareholders, and we are excited to deliver it.”
Sale details
Golden Rim signed a binding sale agreement to sell 100% of the shares in its Burkina Faso subsidiary company that owns and operates its Kouri Gold Project and Babonga Gold Project for cash payments totalling US$15.5 million.
The key terms include:
- cash payment of US$600,000 within 15 business days of signing;
- cash payment of US$5.4 million within 30 days of signing;
- cash payment of US$6.0 million within six months of signing; and
- cash payment of US$3.5 million within 12 months of signing.
The agreement may be terminated if BAOR can’t meet its obligations.
GMR’s shares in the subsidiary company are transferred to BAOR once the sale is complete and when full payment has been received. The transaction is not subject to shareholder approval.