Sunridge Gold Agrees US$65mln Sale of Eritrea Gold Mine

Posted on : Monday , 9th November 2015

Sunridge Gold shot up around 50% after it struck a US$65mln (C$85mln) cash deal to sell its majority stake in Asmara Mining, the joint venture company that owns the Asmara mine, in Eritrea.

Michael Hopley, Sunridge chief executive, highlighted that the proposed deal is at a premium valuation.

He added: “(it) equates to a significant premium to the present market value of Sunridge and under the continuing challenging market conditions for junior resource companies we believe that this is an attractive cash offer.”

The buyer, a Chinese group called Sichuan Road & Bridge Mining Investment Development Corp (SRBM), has also agreed to take on the responsibility for paying a deferred US$13.3mln payment to Sunridge on behalf of state-owned partner ENAMCO.

On closing of the transaction SRBM will pay out US$71mln to Sunridge, accounting for the US$65mln purchase plus the first US6mln owed by ENAMCO. A further US$7.3mln would then follow six months later.

ENAMCO remains responsible for the interest on the US$7.33mln during that period.

The Toronto listed company told investors it would return cash proceeds to shareholders.