JOHANNESBURG (miningweekly.com) – Aim-listed coloured gemstones miner Gemfields has entered into binding agreements to acquire controlling interests in two emerald projects in the Boyacá state, in Colombia.
 
It was seeking to a acquire a 70% interest in a Colombian company that would eventually hold a mining contract over the Coscuez emerald mine.

Located on the Muzo formation, the Coscuez licence covered 47 ha, with the Coscuez mine having been in operation for over 25 years.

Gemfields would pay $15-million to acquire the 70% stake, with a first $7.5-million tranche to be paid in cash and $2.5-million in Gemfields shares.

A second tranche of $2.5-million would be paid on the first anniversary of the completion of the transaction and would be followed by a third and fourth tranche of $2.5-million each upon the reaching of agreed cumulative profit targets.

The transaction was expected to be completed by March 2016, once the transfer of the Coscuez licence to newly incorporated Colombian company Coscuez NewCo, in which Gemfields will hold the 70%, had taken place.
 
Preliminary geological due diligence studies had been carried out by Gemfields between October 2013 and August 2014.
 
Meanwhile, Gemfields had acquired indirect stakes in a package of mining licence applications and assigned concession contracts over 20 000 ha in the Boyacá and other Colombian states. These were mainly greenfield sites, but some small-scale mining had occurred in some of the licence areas.

A number of Colombian companies, or ProjectCos, were the assignees of or applicants for existing concession contracts being administered by the Colombian Mining Agency.

Gemfields acquired indirect stakes of 75% and 70% respectively in underlying licence applications and assignments through two holding companies that own the various ProjectCos.

The total consideration payable by Gemfields under the agreement was $7.5-million, paid in tranches of $450 000.

A first tranche was to be paid on Thursday; a second tranche upon the granting of certain licence applications and/or the assignment of certain concession contracts; a third tranche when bulk sampling started on certain licence areas; a fourth tranche on the commencement of commercial mining; and fifth and sixth tranches, which comprised more than 50% of the total consideration payable, upon the attainment of agreed cumulative revenue targets.

"The proposed acquisitions will require further work and additional exploration before any meaningful production commences but they are clearly in line with our strategy of expanding Gemfields' global footprint in a considered, yet cautious, fashion. The acquisitions offer exciting green- and brownfield growth opportunities over the medium-to-longer term,” Gemfields CEO Ian Harebottle said.