Gold: Gladiator wants to buy a Congo-based project by issuing 390 million shares
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Gladiator Resources (ASX: GLA) is back on the boards this morning, after shares in the company went into a trading halt last Wednesday.
And markets have now been enlightened as to the reason for the halt — Gladiator’s proposed acquisition of the Mpokoto gold project in the Democratic Republic of Congo.
The company has entered into a binding heads of agreement with the African Royalty Company Pty Ltd (ARC), to acquire a controlling 72 per cent stake in the joint venture.
Upon completion of due diligence, Gladiator will pay ARC a non-refundable fee of $25,000.
Under the terms of the proposed deal, the rest of the consideration will be paid via the transfer of shares, depending on the results of Gladiator’s exploration efforts.
Shares in the minnow explorer edged higher to 0.3 cents in morning trade. The company’s stock price has struggled for traction since hitting a high of 1.6 cents in February 2018.
While the deal on its face looks relatively simple, details provided by Gladiator revealed a relatively labyrinthine structure to the transaction.
First, Gladiator will obtain its 72 per cent stake by acquiring a 90 per cent interest in a company called Kisenge Ltd, which is registered in the British Virgin Islands.
Kisenge has a 100 per cent interest in Netcom Global Ltd, which in turn owns an 80 per cent interest in the Mpokoto gold project.
The heads of agreement is conditional on the completion of due diligence and the relevant government approvals from the DRC.
As part of the deal, Gladiator has agreed to spend $500,000 on exploration costs over the next 18 months. To do that, it will need to raise some cash.
In turn, it plans to raise $100,000 via the issuance of 100 million ordinary shares at 0.1 cents. 1620 Capital Pty Ltd is advising.
Pending shareholder approval, directors of the company have also agreed to convert a portion of their directors fees to equity at a price of 0.2 cents, “in order to free up capital to advance exploration”, Gladiator said.
To compensate ARC, Gladiator has a multi-stage plan to pay the rest of its consideration via the issuance of shares — over and over and over again.
If the project proceeds to its conclusion — from signing the formal agreement to a decision to mine — Gladiator plans to issue a total of 390 million shares to ARC (dilution be damned).
To complete step one, senior staff at the company plan to make further site visits to Mpokoto and expect the due diligence process to be finalised within the next month.
Shares in Nexus Minerals (ASX: NXM) were up more than six per cent to 6.5 cents after the company announced the existence of high-grade gold deposits at its fully-owned Wallbrook Project in eastern WA. Results are in for 13 of the 35 holes drilled at the Crusader prospect, which showed “high grade gold intersected within broad mineralised zones,” with peak mineralisation of over 30 grams per tonne.
Estrella Resources (ASX: ESR) has signed a letter of intent with Blue Cap Mining to develop its Munda gold project in Kambalda, WA. Blue Cap is a contracting firm that brings expertise in open pit mining and project management, and will also contribute working capital to fund the development of the mine. Munda is a pre-existing mine that was last operated in 1999 before gold prices fell. Shares in ESR were unchanged at 1.5 cents this morning.
Cygnus Gold (ASX: CY5) has announced it will commence drilling later this month at its recently-identified Kepler Zone near the company’s existing Stanley project. MD James Merrillees said the company’s new understanding of the area “has demonstrated a large — and previously unrecognised — area of the prospective belt that has never been drill tested”. Shares in CY5 were down four per cent at 4.8 cents.
There were some more good gold finds in South Australia for Alliance Resources (ASX: AGS). Results from its recent drilling program revealed mineralisation levels as high as 82 grams per tonne at AGS’ Weednanna Deposit on the Eyre Peninsula. Shares in the company were up 1.12 per cent to nine cents.
And lastly, Orinoco Gold (ASX: OGX) has been suspended from trading because it’s broke. The company announced this morning that the ASX “has determined that OGX’s financial condition is not adequate to warrant the continued quotation of its securities, and therefore it is in breach of Listing Rule 12.2”. It follows an attempt by the company’s new chairman last week to try and ease shareholder concerns following a string of problems at its Brazil-based Cascavel gold mine.