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Gran Colombia to sell Medoro Resources unit for US$20M in Western Atlas shares

Gran Colombia Gold Corp. said Sept. 3 that it intends to sell its subsidiary Medoro Resources International Ltd., holder of mining rights to the Lo Increible 4a and 4b gold project in Venezuela, for US$20 million or about C$26.6 million in Western Atlas Resources Inc. common shares, and to also acquire up to 19.9% equity interest in Western Atlas through a C$1.4 million subscription in the latter's proposed private placement.

The common shares amount to 59,115,555, priced at 45 Canadian cents apiece.

Gran Colombia said that the closing of the transaction will take place when two closing triggers happen, particularly the replacement of the current government of Venezuela by an internationally recognized and democratically elected government, and when a lawful transfer and registration of transfer to Medoro of the project by Venezuelan authorities of competent jurisdiction is completed.

Medoro's rights to the mining contracts were nationalized by the current regime in Venezuela, which will require Medoro to complete the restitution process of such mining rights, and is targeted no later than the second anniversary of the private placement's closing date.

Should the closing triggers not meet the deadline, the share purchase may be terminated, as stated in the letter of intent the companies inked on Aug. 31.

Meanwhile, Western Atlas seeks to raise about C$3 million to C$5 million in a mix of flow-through units and non flow-through units priced at 10 Canadian cents per share and 8.5 cents per share, respectively, through a private placement.

Western Atlas said that the flow through units will consist of 1 flow-through common share and a half a non flow-through common share purchase warrant, with each whole warrant exercisable for 1 additional share at 20 cents apiece, while non flow-through units will consist of 1 non flow-through common share and a half of a non flow-through common share purchase warrant, with each whole warrant exercisable for 1 additional share at 20 cents apiece for two years from the private placement closing.

Upon closing of the private placement, Gran Colombia Vice Chairman Miguel de la Campa will be appointed to the board of Western Atlas, and Gran Colombia will be entitled to appoint one additional member to the board of Western Atlas at the next annual general meeting.

Gran Colombia Executive Chairman Serafino Iacono owns 21% of Western Atlas shares.