Terms Agreed For Sale Of Gubong And Kochang JV Interests
Southern Gold Ltd (ASX:SAU ) believes it has created strong shareholder value through an agreed arrangement regarding its holdings in two Korean projects.
Through its wholly owned Singaporean subsidiary, International Gold Private Limited (IGPL), holds a 50% equity interest in two incorporated joint ventures covering the Gubong and Kochang (Geochang) projects in the Republic of Korea.
The other 50% is held by London Stock Exchange (LSE) listed Bluebird Merchant Ventures Ltd who elected to acquire the 50% interests held by IGPL when IGPL did not support BMV’s proposed decision to mine for each project in mid 2020 and, under each Joint Venture Agreement, IGPL was deemed to have offered its interest for sale to BMV at an agreed or expert determined price.
Southern Gold Managing Director, Simon Mitchell, said Southern Gold and BMV have executed a definitive agreement to settle the matter. In exchange for IGPL’s joint venture interests, BMV will either issue to IGPL 200 million BMV shares at a deemed issue price of US$0.05/share or issue at least 50 million BMV shares but less than 200 million BMV shares and pay IGPL US$0.05 per BMV share it does not issue, for a deal value of US$10million.
“Southern Gold has effectively agreed to a share swap deal where we will exchange our subsidiary’s 50% interest in the two (Kochang and Gubong) Joint Ventures for an approximate 30% interest in BMV once all shares are issued, Mr Mitchell said.
“The value of this position will be more easily ascertained by investors, given BMV’s listing on the LSE, with a current deal value of approximately A$13.2 million at current exchange rates.
“In other words, the value of the shareholding in BMV will constitute more than 200% of our A$5.9m enterprise value given our March 31, 2021 cash balance of A$9 million and market capitalisation of A$14.9 million.”
“The BMV shareholding will be a very valuable equity interest and I expect it to significantly increase in value as BMV advances the Kochang and Gubong projects towards their stated near- term objective of gold and silver production.
“As a new and significant shareholder of BMV, our current intent is not to sell small parcels of shares into the market, which would be detrimental to the share price, but to allow the company to grow and advance into its next stage of development.”
For further information please visit: http://southerngold.com.au/
