By Sunridge Gold,
Sunridge Gold (SGC: TSX.V/SGCNF: OTCQX) has struck a US$65 million cash deal to sell its 60% interest in the Asmara Mining Share Company (AMSC), holder of the Asmara Project in Eritrea, to state-owned Sichuan Road & Bridge Mining Investment Development Corp. Ltd. (SRBM) for an upfront purchase price of US$65 million cash.
The Share Purchase Agreement (SPA) was signed today in a ceremony in Asmara attended by a large delegation of about 20 persons from China including Mr. Liu Jie, Vice Governor of Sichuan Province and Mr. Sun Yun, Chairman of the Board Sichuan Railway Investment Group.
The SPA was signed by Mr. Sun Tiandong General Manager of SRBG Overseas Company and Michael Hopley, President and CEO of Sunridge.
In the agreement, 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 (expected to be in the first quarter 2016), SRBM will pay Sunridge US$71 million in cash comprising the US$65 million purchase price and the first US$6 million of the deferred payment owed by ENAMCO.
ENAMCO will pay Sunridge the interest accrued on the US$6 million from June 27, 2014 to the date of closing.
SRBM will also deliver a bank guarantee to Sunridge for the remaining US$7.33 million deferred payment to be paid to Sunridge within 6 months of closing.
ENAMCO will be responsible for interest owing to Sunridge on the US$7.33 million payment.
Michael Hopley, President and CEO of Sunridge commented
“The US$65 million purchase price for our 60% interest in AMSC, to be paid by SRBM or US$65 million at the current exchange rates 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.”
SRBM has conducted extensive and detailed financial, technical and legal due diligence on the Asmara Project and AMSC over the past several months. This work is now completed and the SPA is not subject to any further due diligence work.
The SPA has been approved by the boards of directors of both Sunridge and SRBM. Prior to its execution, the parties received approval in principle from the Sichuan Provincial Regulatory body, Sichuan State-Owned Asset Supervision and Administration Commission of the State Council (SASAC). Sunridge’s partner ENAMCO has also given its consent to the transaction.
About Sichuan Road & Bridge Group
SRBM is a subsidiary of Sichuan Road & Bridge (Group) Corporation (SRBG) a large-scale state-owned enterprise based in Chengdu, China and one of the core subsidiary companies of Sichuan Railway Investment Group Co., Ltd. whose main business is the construction of transportation infrastructure such as highways and railways, the development of hydropower and land and mineral resources projects.
Since the mid 1990’s SRBG has been active in infrastructure projects in Eritrea and is also a partner with ENAMCO in a mineral exploration project in the country.