Orsu Metals’ wholly-owned subsidiary Lero Gold Corp has entered into an agreement with three arm’s length individuals, to sell its 100% interest in Tournon Finance Ltd, which owns 100% of Oriel in Kyrgyzstan LLC (OiK). The latter holds Orsu’s interest in the Akdjol-Tokhtazan project in the Kyrgyz Republic.
The company has been actively seeking to sell this project since the end of 2011.
The key terms of the agreement are:
- The equity interest will be sold for an effective initial consideration of US$500,000 comprising the nominal sum of US$1, and the purchaser's assumption of the existing liabilities of OiK, estimated at US$500,000.
- In addition, the existing interest free loan, payable on demand, of approximately US$4.19 million between Lero and OiK will remain in place and the purchasers may, within two years of the effective date of the August 1 agreement elect to purchase the loan for the sum of US$2 million or cancel the loan upon the payment by the purchasers of the sum of US$2.0 million. In the event that the purchasers do not elect either of such options, the loan will become repayable within three years from the commencement of production at an interest rate of LIBOR plus 5%.
- Deferred consideration of US$2 million is payable from production revenues over the first two years of production at the Akdjol-Tokhtazan project, at US$250,000 per quarter from the commencement of production.
- The transaction is subject to normal commercial conditions, including formal exchange of documents and re-registration of the licences in the name of the purchasers, which are expected to be completed by mid-August.