Alba Mineral Resources plc said it had agreed to acquire the remaining 10% interest in Gold Mines of Wales Ltd (GMOW) to take 100% ownership of the Clogau gold project in the Dolgellau Gold Belt in Wales.
CLOGAU
The site contains the Clogau gold mine where Alba identified prospective gold targets through extensive exploratory drilling in 2020-21.
The area also holds a large number of gold targets and former gold workings outside the footprint of the mine within a total option area of 106.94 km².
TERMS
The company will buy back a 3% net smelter return royalty owned by the vendor, reducing the royalty to 1%, as well as a residual £72,000 of loans held by the vendor.
Alba added it would pay a total of £400,000 for the 10% stake.
This is payable by the issue of 200 million Alba ordinary shares each at 0.2p, which is a premium of 25% to the closing share price of 0.16p on 22 August 2022, plus 81,930,830 two-year share warrants with an exercise price of 0.4p per share.
COPPER
The company also agreed that if, during the five years following completion of the acquisition, it acquired the exclusive right to explore for and/or exploit the Clogau licence area for copper, GMOW should have the right to a 10% working interest in those copper rights.
Alba added that the prospectivity of the Dolgellau Gold Belt for copper had been long known.
“In the first half of the nineteenth century, the most important mines in the Mawddach Valley included the Vigra and old Clogau copper mines, both of which are situated within the area covered by Alba’s Clogau exploration licence (which only covers gold and silver).
“It is believed that the two decades from 1825 to 1845 covered the principal era of copper working.”
VIABILITY
Executive chairman George Frangeskides said that the purchase of the remaining share in Clogau reflected the company’s confidence in the long-term prospects for the project.
“The 10% minority stake was free carried to commercial production and the vendors also held a 4% net smelter return royalty over the project, so acquiring both the free carried interest as well as 75% of the royalty greatly improves the economic viability of the project for Alba.
“At the same time, any concerns regarding the market impact of the issue of Alba shares has been addressed by a lock-up of the consideration shares for six months plus a further six-month orderly marketing restriction.
“We have also negotiated to issue the consideration shares at a significant premium to the last closing price, reducing the dilutive effect of the transaction.”