Cora Gold Limited has entered into conditional agreements to demerge its Senegalese assets into a new private company, while the group concentrates on developing its Sanankoro Gold Project in south Mali.
The assets being separated mainly comprise Cora’s 100% interest, before any dilution by the State, in the Madina Foulbé exploration permit in Senegal’s Mako Gold Belt. The holding company for the demerged business will be Madina Minerals Limited, which will be registered in the British Virgin Islands.
The company said it will issue a further announcement as the demerger progresses, including details of the timetable. Once completed, Madina is expected to update its shareholders on its work programmes and strategy.
Chief executive Bert Monro said the board believes separating the Senegalese assets will allow Cora to stay focused on delivering its first gold mine at Sanankoro.
He added that previous exploration work had identified large-scale gold mineralisation potential at Madina Foulbé, which he described as sitting within one of the most prolific gold belts in West Africa alongside world-class deposits. He said establishing Madina as a standalone vehicle would provide a dedicated platform to advance the project.
The demerger is conditional on approval from the Senegalese Ministry of Mines for the transfer of Cora’s interest in the permit to a wholly owned subsidiary of Madina registered in Senegal, and on the setting up of the DI facility.
The transaction is due to complete on the fifth business day after both conditions are satisfied.
Cora said the demerged assets exclude the net smelter return interest, or NSR Interest, which will remain with the company. In return for the acquisition of the demerged assets, US$1.4 million will be payable to Cora on completion. That sum will remain outstanding as an interest-free loan repayable on or before 31 December 2027, together with a 5% repayment premium, unless it is converted earlier, in whole or in part, at Cora’s option into Madina ordinary shares during an equity fundraising.
Any conversion would be at a 5% discount to the price per Madina share subscribed under the fundraising.
Before completion, Cora shareholders will be contacted to ask whether they wish to opt out of receiving Madina shares. Unless they opt out, holders of Cora shares will receive one Madina share for every ten Cora shares held, rounded down to the nearest block of ten, based on holdings at 18:00 UK time on the third business day after the conditions are satisfied.
Computershare will administer Madina’s register of members after completion. Certificated shareholders will receive Madina share certificates, while depositary interests will be held in a disabled state within CREST.
The shares and depositary interests will be subject to restrictions so they cannot be traded or transferred while Madina remains a private company. If the DI structure is no longer suitable, or if the Madina shares are not admitted to trading on a stock exchange within 12 months of completion, the DI facility will be unwound in an orderly manner and alternative holding arrangements will be introduced.
Cora will also provide Madina with initial working capital funding of US$750,000 after completion, through 75 unsecured convertible loan notes of US$10,000 each. These notes will mature on 31 December 2027 and carry a 5% repayment premium unless converted earlier.
The notes may also be converted, in whole or in part, at Cora’s option into Madina shares during a fundraising, again at a 5% discount to the fundraising price.
After completion, Madina will be responsible for sourcing its own working capital independently of Cora.
The Madina Foulbé project is subject to a joint venture agreement with BB First Commodity Holding Ltd, the registered holder of the permit. Under that agreement, Cora has earned a 100% interest in the project, before dilution by the State, while BB First retains a 2% net smelter return interest in the permit area.
BB First and Cora have agreed that, before completion, Cora will buy the NSR Interest for US$105,000 in cash and the joint venture agreement will then be terminated. Cora will continue to hold the NSR Interest after the demerger. The NSR Interest includes a right for the payer to buy it out for up to US$2.5 million.
