Asante Gold Corp. (CNSX:ASE) shares rocketed 30% on Monday after the company said it forming a joint venture with BXC Company (Ghana) Ltd. to form a joint venture to develop the Kubi mining leases in Ghana toward production.
Kubi Gold JV will be a 50-50 joint venture.
BXC, a wholly owned subsidiary of Beijing Fuxing Xiao-Cheng Electronic Technology Stock Co. Ltd. (BFXC), has agreed to provide C$19.5mln in funding to earn 50% of the Kubi Gold JV and a 30% equity interest in Asante.
BXC will participate in a private placement by purchasing 16,468,400 or such other number of common shares necessary to give BXC a 30% equity interest in the then issued capital of the company, at a price of C$0.20 per share, subject to the approval of the Canadian Securities Exchange.
Asante will apply 10% of the proceeds of the private placement to its unallocated working capital, and the balance to complete its initial funding of the Kubi Gold JV. The agreement is subject to final due diligence and closing is expected by December 31.
BXC has also committed to providing additional funding to the Kubi Gold JV on reasonable commercial terms, for the construction of additional facilities such as a production shaft, full processing facilities or expansion.
BXC has the right to maintain a 30% equity interest in new equity financings announced by Asante, and up to two seats on the Board of Directors of the Company.
The agreement is subject to all requisite governmental and regulatory approvals, including disinterested shareholder approval and closing of the Kubi acquisition from Goknet Mining Company Limited (Goknet) such approvals expected at the Asante AGM to be held in Vancouver on December 28, 2016, and if required, the consent of the Minister of Lands and Natural Resources of Ghana; and any shareholder, regulatory and stock exchange approvals required by BFXC.
Asante has agreed to pay from its share of the JV revenue the two underlying Kubi royalties: the Goknet 1% Net Smelter Returns royalty (recently re-negotiated to 1% NSR from previous 2% NSR); and the Royal Gold, Inc. 3% Net Proceeds of Production royalty. New mining leases in Ghana also carry on behalf of the Ghana government a 5% NSR and a 10% interest in any dividends paid out by the operating company.
Beijing Fuxing Xiao-Cheng Electronic Technology Stock Co. Ltd. is listed in China on the Shenzhen Stock Exchange, with a market capitalization of US$580mln, and primarily involved in national power grid infrastructure in Asia, South America and Africa.
BXC has been active in Ghana for a decade and has completed, or current contracts for over US$200mln including: the design, build and operation of the 20MW Mankoadze solar plant; two US$20mln projects pre-financed by BXC involving the upgrade and extension of power grid networks; and a US$170mln 10-year contract with the Electricity Corporation of Ghana (ECG) installing 450,000 smart meters to reduce distribution system losses. BXC is also developing two gold mining leases and two exploration projects in Ghana.
As a result of the agreement, the company has suspended the previously announced $0.18 Unit private placement offering. Subscriptions that were received and accepted up to October 3, 2016 will be completed, totaling 2,125,311 Units for gross proceeds of $382,556. No Insiders or Directors of Asante, or principals or associates of BXC are participating in the placement. Finders fees of $15,000 and 41,667 warrants are payable.
“We are extremely pleased to welcome BXC as our JV partner and major shareholder to move Kubi forward to production. Their successful operating history in Ghana and strong balance sheet will complement our strengths in gold exploration, discovery and development. Their commitment to secure future debt funding for the joint venture gives Asante a non-dilutive path forward to fully develop the potential of Kubi,” said Douglas R. MacQuarrie, President & CEO of Asante.
“Our financial and operating strength complements Asante’s proven exploration and development expertise. We are committed to assisting Ghana to provide electricity at competitive rates – which will enhance our growing investments in the gold mining sector,” said Yi Cheng, Group Chairman of BXC and President of BFXC.
Asante Gold shares were up 30% at C$0.26 on Monday.
Story by ProactiveInvestors