Westgold Resources (WGX.TO) executed a binding asset sale and purchase agreement with Corazon Mining (ASX: CZN) to divest the Chalice Gold project, located in the Southern Goldfields of Western Australia, for $25.7 million, it said over the holiday weekend.
The consideration comprises of $8 million in cash, $6.7 million in CZN scrip and $11 million in deferred cash consideration, payable on satisfaction of certain milestones, it said. To help fund the deal, Corazon has received firm commitments to raise $16.5 million, before costs.
On completion of the deal and Corazon equity raise, Westgold will emerge as an about 19.9% shareholder in Corazon with the right to appoint a nominee to the Corazon Board. The company will also receive equity participation rights for future capital raisings undertaken by Corazon, subject to customary exceptions and compliance with the ASX listing rules.
Completion of the deal is subject to customary conditions precedent being satisfied or waived and will occur five business days after all conditions have been satisfied or waived, it said.
Shares of Westgold closed down 4.5% to $5.11 on Friday on the Toronto Stock Exchange.