African Gold Ltd. said Sept. 5 that it entered into a conditional share purchase agreement to acquire Abra Resources Pty Ltd., which through its wholly owned subsidiary owns the Samanafoulou, Sitikili, Yatia, Golokasso gold projects in Mali, and to have the option to purchase a 95% stake in the Walia gold project, also in Mali.
A payment of A$45,000 has been made to Abra to secure a 45-day exclusivity right to complete legal, financial and technical due diligence.
To complete the acquisition, African Gold has to pay A$125,000 in cash, issue 3.0 million shares at 16.5 Australian cents apiece, and issue 12.5 million deferred consideration shares that will come in three tranches.
The first tranche consists of 2.5 million shares to be issued within three years of completion of declaring an inferred, indicated or measured resource with a minimum grade of 1.5 g/t for a total of at least 500,000 ounces of gold within the projects or if African Gold announces commercial production of gold from any of the projects.
The second tranche consists of 5.0 million shares to be issued within four years of completion of declaring a resource with a minimum grade of 1.5 g/t for a total of at least 1.0 million ounces of gold or an announcement of commercial production of gold from any of the projects.
The third tranche consists of 5.0 million shares to be issued within five years of completion of declaring a resource with a minimum grade of 1.5 g/t for a total of at least 2.0 million ounces of gold or an announcement of commercial production of gold from any of the projects.
African Gold also has to pay A$1.0 million in cash to Abra shareholders if 2.0 million ounces of gold is announced by African Gold between five and seven years, which if happens, will no longer require to company to issue the 5.0 million shares under the third tranche of the deferred consideration shares.
In July, African Gold's unit African Gold Mali SARL entered four option agreements to acquire the Falémé gold project in Western Mali.
