Choosing to concentrate on its Mexican projects, Monarch Resources (MRE-T) has reached an agreement to sell its Venezuelan properties to Bolivar Goldfields (BVG-T).
Bolivar will take over the mine known as La Camorra, as well as the Revemin processing plant and several exploration properties in Venezuela. In return, Monarch will receive US$13.3 million in cash and 1 million shares in Bolivar.
The acquisition allows Bolivar, whose Tomi gold mine is now being developed, to process ore at Revemin, about 16 km away. As a result, Tomi will be brought into production more quickly. Bolivar plans to spend about US$8 million upgrading the Revemin plant.
The most recent figure on the minable reserve at La Camorra is 750,000 tonnes grading close to 15 grams gold per tonne. Bolivar plans to continue operating the mine as a source of cash flow. Monarch retains a piece of the action through its 1 million shares in Bolivar, which represent a 2.5% interest.
The deal is scheduled to close in December, and will depend on a satisfactory due diligence investigation and on approvals by boards of directors, shareholders and regulatory agencies. Bolivar is expecting to finance the purchase by modifying an existing arrangement with Standard Bank of London, under which the bank is providing debt financing for the Tomi project. The purchase of the Revemin mill will decrease the capital cost of bringing Tomi into production, so the company is confident that it can pay for the purchase through bank debt.
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