Advance Gold Corp.is pleased to announce that Aviva Corporation Ltd. ("Aviva"), its joint venture partner in Kenya, has entered into a binding sale and purchase agreement ("SPA") with African Barrick Gold plc ("ABG" LSE: ABG) to sell all of Aviva's Kenyan gold and base metals assets for an initial cash payment of A$20 million.
ABG is one of the five largest gold producers in Africa and this acquisition represents its first move into Kenya. ABG is majority owned by Barrick Gold Corporation (NYSE & TSX: ABX), the world's largest gold producer.
The key terms of the SPA are as follows:
- ABG will acquire all the shares in Aviva Mining Kenya Limited ("Aviva Kenya"), the company that owns Aviva's Kenyan assets for A$20 million.
- There is a further payment of A$10 million due to Aviva if a National Instrument 43-101 ("NI 43-101") compliant indicated resource of 3 million ounces or more is declared over the project areas.
- ABG will fund all the costs that Aviva incurs on the Kenyan assets, based on an agreed work program retrospectively from 1 June 2012, until completion of the SPA. This funding is capped at A$1million but can be increased with ABG's approval.
- In addition, ABG will fund the US$0.1 million for the exercise by Aviva Kenya of its Preliminary Option in terms of the Joint Venture with Advance Gold. Following the payment of the Preliminary Option exercise price of US$0.1 million, Advance Gold will grant Aviva Kenya the right to acquire a 51% ownership interest in the mineral rights, owned by Advance Gold and which are the subject of the Joint Venture Agreement, in consideration for Aviva Kenya incurring further exploration expenditure of US$0.5m in a defined period of 24 months in relation to those mineral rights.
- If the SPA does not proceed to completion, other than due to a material breach by ABG, Aviva will be required to repay the funding advanced by ABG under the SPA within 90 days.
The SPA is subject to the following conditions precedent:
- Approval of Aviva shareholders under the ASX Listing Rules at an extraordinary general meeting expected to be convened in late August or early September.
- Kenyan Competition authority approval of the transaction.
- ABG funding, the Preliminary Option exercise price of US$ 0.1 million in terms of the Joint Venture with Advance Gold Corp.
- Aviva's respective Joint Venture Partners, Lonmin Plc and Advance Gold Corp., agreeing to release Aviva as a guarantor under the Joint Venture Agreements and replacing it with ABG.
Aviva Kenya has the following material interests in Kenya*:
- The right to earn a 75% interest in Special License 265, Special License 266 and Special License 265 through a Joint venture with Advance Gold Corp.
- a 51% interest in Special License no.123 and Special License 213, with an option to earn an additional 24% through a Joint Venture with Lonmin Plc.
*Aviva Kenya only has assets in Kenya
For further information, please contact:
Jim Gillis, President
Telephone: (250) 314-0186
This news release contains certain statements that may be deemed "forward-looking statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements. Forward looking statements are based on the beliefs, estimates and opinions of the Company's management on the date the statements are made. The Company undertakes no obligation to update these forward-looking statements in the event that management's beliefs, estimates or opinions, or other factors should change, except as required by law.
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