Manas Resources has signed two separate agreements relating to the sale of its mining assets in the Kyrgyz Republic. The sales will realise total consideration of US$10.5 million.
The company has signed a binding term sheet with Chinese state-owned enterprise Guizhou Geological and Mineral Resources Development Company for the sale of all assets apart from the Savoyardy project for cash consideration of US$10 million. A separate agreement has been for signed with Mr Xijin Han for the Savoyardy assets for cash consideration of US$500,000.
Manas has been investigating opportunities to extract value from the Shambesai project in the Kyrgyz Republic. A number of options have been assessed including partnership, joint venture, divestment or the continued development of the project by way of debt financing.
Advanced discussions were held with a number of prospective financiers with regards to these various options. However, given the challenges involved in financing greenfields development projects in the Kyrgyz Republic and the relative merits of the ASX-listed company’s recently announced acquisition of the Victoria Gold Project in Tanzania, the directors believe that divestment of the Kyrgyz assets will deliver the best outcome.
Manas chairman Mark Calderwood said, “The sale of our assets in the Kyrgyz Republic for US$10.5 million is a positive result for shareholders in the current market, Even if the very considerable challenge of finding a financier for the development of the Shambesai Gold project were to be overcome, existing shareholders would be subject to significant dilution in order to meet the equity component of financing conditions.
“After considering this and other development challenges, the Board believes that the negotiated sale outcome offers the best result for shareholders with the sale value providing a significant premium over the company’s current market capitalisation.
“The divestment of the Kyrgyz assets will allow Manas to focus its resources on the exciting Victoria project which will become the company’s sole focus.”