Cora Gold Limited (LON:CORA), the West African focused gold company, has announced that it has entered into conditional agreements regarding the demerger of its assets in Senegal into a new private entity to be owned by the Company’s shareholders. The Demerged Assets principally comprise Cora’s 100% interest (pre-dilution by the State) in the Madina Foulbé exploration permit located within the Mako Gold Belt of the Kédougou-Kéniéba Inlier in eastern Senegal. The holding company for the demerged group will be Madina Minerals Limited (registered in the British Virgin Islands).
The Company will make a further announcement regarding the Demerger as it progresses, this will include details of the timetable for the Demerger. Once the Demerger is completed Madina will provide an update to its shareholders on its work programmes and strategy.
Bert Monro, Chief Executive Officer of Cora Gold, commented: “As we work towards the commencement of construction at our flagship Sanankoro Gold Project in south Mali, Cora’s board of directors believes that separating the Company’s Senegalese assets will allow Cora to remain focused on delivering its first gold mine.
“Previous exploration work has identified large-scale gold mineralisation potential at Madina Foulbé, which sits within one of the most prolific gold belts in West Africa alongside world-class deposits. Establishing Madina as a standalone vehicle will provide a dedicated platform through which to advance the project.
“Importantly, through the Demerger, our shareholders will retain full exposure to the upside of Madina Foulbé; no value is being diluted or removed. Shareholders will hold interests in two complementary gold stories: a near term construction and production opportunity at Sanankoro in Mali; alongside an earlier stage exploration opportunity with significant scale potential at Madina Foulbé in Senegal. The Demerger ensures both assets are progressed independently for the benefit of all stakeholders.”
Demerger
The Demerger is subject to:
● the approval, in terms satisfactory to the parties, of the Senegalese Ministry of Mines to the transfer of Cora’s 100% interest in the Permit to a wholly owned subsidiary of Madina that is registered in Senegal; and
● the setting up of the DI Facility as set out below
together the ‘Conditions’. The Demerger will complete on the fifth business day after the date of satisfaction of the Conditions (‘Completion’).
The Demerged Assets exclude the NSR Interest (see below) that will continue to be held by Cora. In consideration for the acquisition of the Demerged Assets the sum of US$1.4 million (the ‘Consideration’) will, upon Completion, be payable to Cora. The Consideration is to be left outstanding as an interest free loan repayable on or before 31 December 2027 together with a 5% repayment premium on the principal outstanding, unless converted beforehand, in whole or in part, at Cora’s option into ordinary shares in the capital of Madina (‘Madina Shares’; each a ‘Madina Share’) at the time of an equity fundraising by Madina, the conversion price being a 5% discount to the price per Madina Share subscribed under such fundraising.
Prior to Completion holders of ordinary shares in the capital of Cora will be contacted to enquire as to whether they may wish to opt out from receiving their allocation of Madina Shares. Save for those who may opt out, holders of Cora Shares will, upon Completion, become holders of Madina Shares on the basis of one Madina Share for every ten Cora Shares held (rounded down to the nearest block of ten Cora Shares) as at 18h00 (UK time) on the third business day after the date of satisfaction of the Conditions. Upon Completion, Computershare will administer Madina’s Register of Members with:
● shareholders of certificated holdings being issued with Madina share certificates; and
● depositary interest (‘DI’) holdings of shareholders being held in a disabled state within CREST.
The shares and DIs will be issued subject to restrictions such that they will not be capable of being traded or transferred whilst Madina remains a private company. In the event that the DI structure ceases to be appropriate or the Madina Shares are not admitted to trading on a stock exchange on or before the date which is 12 months after the date of Completion, then the DI Facility will be unwound in an orderly manner and alternative arrangements will be implemented for the holding of the relevant Madina Shares.
In addition, upon Completion the Company will provide Madina with initial working capital funding of US$750,000 by way of 75 unsecured convertible loan notes of US$10,000 each to be issued by Madina and maturing on 31 December 2027 together with a 5% repayment premium on the principal outstanding (‘Convertible Loan Notes’; each a ‘Convertible Loan Note’), unless converted beforehand. The Convertible Loan Notes may be converted, in whole or in part, at Cora’s option into Madina Shares at the time of an equity fundraising by Madina, the conversion price being a 5% discount to the price per Madina Share subscribed under such fundraising. Post Completion, Madina will be responsible for sourcing its own working capital, independently of Cora.
Acquisition of NSR Interest
Madina Foulbé is subject to a joint venture agreement (the ‘JVA’) with BB First Commodity Holding Ltd (‘BB First’), the registered holder of the Permit. In accordance with the JVA, Cora has earned 100% interest in Madina Foulbé (pre-dilution by the State) with BB First retaining a 2% Net Smelter Return interest (the ‘NSR Interest’) in the area covered by the Permit. BB First and Cora have agreed that, prior to Completion, Cora will acquire the NSR Interest from BB First for the sum of US$105,000 payable in cash and the JVA shall then be terminated. Cora shall continue to hold the NSR Interest post completion of the Demerger. The NSR Interest includes a right for the payer to buyout the NSR Interest for payment of up to US$2.5 million to the holder.
