Elcora Advanced Materials (ERA.V) said Thursday reached a binding range of terms (BROT) agreement with Elmaic Trading CC for the proposed acquisition of the Eldorado gold property and associated surface tailings stockpile in South Africa.
The company said the proposed transaction contemplates the acquisition of 100% of the issued and outstanding shares of the vendor following its conversion to a private company, together with all assets, rights and interests related to the project.
Elcora said completing of the transaction would mark its direct entry into gold asset ownership in South Africa.
Under the terms of the BROT, the consideration for the proposed acquisition is US$2 million in cash and 20-million Elcora shares, subject to TSX Venture Exchange approval and the satisfaction of applicable closing conditions.
"The signing of this binding agreement to acquire the Eldorado mine marks a transformational moment for Elcora. We are entering a world-class gold district - the Barberton Greenstone Belt, home to operations like Fairview and Lily - through a disciplined, self-funding transaction structure that we believe is highly aligned with shareholder value creation," chief executive Troy Grant said.
The transfer of ownership interests in the vendor to Elcora is expected to occur in two tranches, with 50% of the vendor's membership interests or shares to be transferred upon satisfaction of the applicable initial purchase price conditions, and the remaining 50% to be transferred upon satisfaction of the remaining purchase price obligations..
According to the statement, in addition to the purchase consideration, and subject to the financing condition, Elcora is to make available a minimum of US$1.3 million, separate from the purchase price and any initial shareholder payments, for capital and operating expenditures required to advance the project.
The parties expect to close the transaction by July 15.
Elcora shares closed unchanged at $0.25 on Wednesday.