BULAWAYO — AIM-listed African Consolidated Resources (AFCR) has cancelled the acquisition of Dalny Mine from Falgold after failing to raise $12 million which constituted a pre-condition of its conditional agreement to acquire the Kadoma-based gold mine.
The news comes as a blow to Falgold, which had hoped to use the cash from Dalny sale to breathe life into its moribund operations.
AFCR said it now awaits the re-imbursement the money initially advanced to Falgold as part of the sale agreement.
“African Consolidated Resources . . . has not been able to raise $12 million, which constitutes a pre-condition of its conditional agreement to acquire the Dalny Mine and associated infrastructure in Zimbabwe from Falcon Gold Zimbabwe,” the company on Tuesday said.
“Accordingly, AFCR has formally withdrawn from the Dalny Agreement, and the acquisition of the Dalny Mine for the purpose of trucking mined ore from the Company’s Pickstone-Peerless mine will not go ahead. As a consequence of the termination of the Dalny Agreement, AFCR is due reimbursement of $500 000 of the initial payment of $1 million held on account by Falgold.”
However, the company said that it had secured joint venture finance which will enable it to start mining at Pickstone-Peerless with a local partner.
“While a definitive contract has yet to be concluded, the terms of the non- binding agreement in principle envisage that AFCR will transfer its interest in Pickstone-Peerless and in Gadzema (including the Giant Mine) to a jointly owned company (NewCo) over which the company will have management control and into which the partner will contribute $4 million cash for a 50% equity holding in the NewCo,” it said.
It said conversion rights for the interest of the partner in NewCo into ordinary shares of one pence each in AFCR was being contemplated but the precise terms were yet to be finalised.
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“The finance into the joint venture is calculated by the company to be sufficient to commence production at Pickstone-Peerless within eight months at a provisionally targeted run rate of ore production of 10 000 tonnes per month. As part of the joint venture arrangements, provision has been made for compliance with Zimbabwe’s indigenisation laws,” it added.
