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Disposal of the Company’s Ethiopian assets
Alecto Minerals (LSE:ALO), the AIM quoted mineral exploration company focussed on Africa, has announced the disposal of its wholly owned subsidiaries Nubian Gold Exploration Limited and Rift Valley Resources Limited, which hold all of the Company’s interests in the Federal Democratic Republic of Ethiopia, namely the Wayu Boda and Aysid-Metekel exploration licences, to Wame Mineral Development, a private Ethiopian mineral development company.
Background to the Disposal
Wayu Boda and Aysid-Metekel are two early stage exploration projects in Ethiopia where there has been only limited exploration work performed to date and which therefore require significant further investment to progress. Following the termination of the joint venture with Centamin plc (the ‘Centamin JV’) in February 2015 in respect of these Ethiopian assets, the Company has been considering its options and believes that the Disposal enables the Company to retain an exposure to the assets going forward, whilst preserving the Company’s existing resources.
Accordingly, the Disposal is in line with the Company’s previously stated strategy of becoming a gold producer in the near to mid-term and the Company continues to evaluate a number of potential acquisition targets to achieve this objective. In addition, the Company continues to seek to deliver value through the progression of its more advanced assets, namely the Kossanto East and Kossanto West Gold Projects in Mali and the Kerboulé Gold Project in Burkina Faso.
Principal Terms of the Disposal
Under the terms of the respective sale and purchase and associated royalty agreements, Wame will pay Alecto an initial nominal consideration of £1 in respect of each of Nubian and Rift Valley and potential further deferred consideration in the form of a royalty of US$3 per JORC resource ounce of gold or gold equivalent discovered up to a maximum of US$1.0 million, in respect of each of the licences. Accordingly, the maximum aggregate deferred consideration that could be receivable by the Company in the future is US$2.0 million. Any deferred consideration ultimately received will be used to strengthen the Company’s then prevailing balance sheet.
In addition, in the event that Wame disposes of Nubian or Rift Valley or the licences within a two year period from completion, Alecto will be entitled to receive a proportion of the net proceed of such sale.
Further Information on Nubian and Rift Valley
As at 31 December 2014, Nubian and Rift Valley had total assets of ETB12.9 million (approximately £0.4 million) and ETB13.5 million (approximately £0.4 million) respectively. For the year ended 31 December 2014, Nubian and Rift Valley had profits before tax, relating to monies received from Centamin plc pursuant to the Centamin JV, of ETB3.3 million (approximately £0.1 million) and ETB3.1 million (approximately £0.1 million) respectively.
Alecto’s CEO, Mark Jones, commented:
“This disposal forms part of our development plan to focus our efforts on becoming a gold prouder in the near to mid-term and our more advanced gold projects in Mali and Burkina Faso. The properties in Ethiopia are both vast and underexplored and considering the more advanced nature of the rest of our gold asset portfolio, and the opportunities available at each to more readily add value, we believe that this divestment will better enable us to manage our balance sheet whilst still providing us with upside exposure to ounces delineated at either property in the future.”
