Asante Gold Corporation (CSE:ASE/ FRANKFURT:1A9) has announced that the Special Committee of the Board has reached an agreement with Goknet Mining Company Limited to close the acquisition of the Kubi Mining Leases on terms as substantially contained in the Kubi Definitive Option Agreement dated 28th February 2015.
Asante will acquire the Kubi Mining Leases by issuing seven million treasury shares and reserving for future delivery to Goknet, a total of 8,000 ounces of gold, and thereafter reserving for Goknet a 2% Net Smelter Return royalty (the “Kubi NSR”).
Royal Gold, Inc. of Denver holds a 3% Net Proceeds of Production royalty, and the Ghana Government holds a statutory 10% free carry equity and 5% NSR royalty interest.
Asante plans to further explore, and if warranted, develop Kubi as a custom milling and direct shipping underground operation. It is located on major deep seated auriferous structures associated with AngloGold Ashanti’s 66-million ounce Obuasi Gold Mine and Perseus Mining Limited’s 6.6-million ounce Edikan Gold Mine.
In addition, the company will acquire Goknet’s interests in eight prospecting licenses: two totalling 38 sq km adjoining to the west of the Kubi Mining Leases; and six contiguous licenses totalling 270 sq km located on the Asankrangwa Gold Belt 15 km to the south west and along strike of the Asanko Gold Mine.
Asante said in a statement that each of these licenses has had considerable exploration work completed and many have drill-ready targets outlined.
These licenses are in the process of being transferred to Goknet from a third party, subject to the consent of the Minister of Lands, Forestry and Mines.
To purchase the licenses, the company will issue up to a maximum of three million treasury shares. Shares will be issued pro-rata on a licence by licence basis, if, as and when valid, title is registered in the name of the company.
Goknet will retain a 2% Net Smelter Return royalty on each licence acquired by the company.
Douglas MacQuarrie, President and CEO said in a statement that: “Acquiring Kubi at a cost of circa $18 million or US$40 per ounce of NI43-101 gold resources is a major step forward for the company. Kubi has near-term development potential, an excellent location and considerable grade and resource ounce upside. Share dilution has been minimised by using gold forward and NSR royalty payments. The addition of the southern half of Goknet’s highly prospective Ashanti II concessions to our current Betanase Option and Fahiakoba concessions give us exceptional discovery upside and growth opportunities. Our immediate focus is to complete a financing to commence the driving of a decline at Kubi for the resource to reserve upgrade drilling and to fund aggressive exploration on our other holdings.”