PERTH (miningweekly.com) – ASX-listed Sovereign Gold Company and its listed subsidiary Precious Metal Resources (PMR) have agreed to a corporate restructure that would see the company’s focus shift to the Sugec project tenement, in New South Wales.

Sovereign and PMR currently hold exploration tenements in New South Wales, targeting gold, silver and base metals, and both companies have separate joint venture (JV) agreements and memoranda of understanding with Jiangsu Geology and Engineering (Sugec), under which the Chinese firm would provide up to A$21.5-million in funding for the Sugec tenements.

Under the proposed corporate restructure, Sovereign would take ownership of PMR’s Sugec tenements, but would relinquish control of the subsidiary. PMR, in turn, would conduct a selective reduction of capital, cancelling some 64-million of its shares currently held by Sovereign.

Sovereign would then acquire the PMR Sugec tenements for one-million of its own shares.

Following the transaction, Sovereign Gold’s focus would be on the development of the Sugec tenement, where it would undertake exploration with Sugec. Following Sugec’s A$21.5-million investment in the gold project, Sovereign would maintain its 55% shareholding in the project area.

PMR, in turn, would focus on the development of its Peel Fault gold project, following the completion of the restructure.

The companies told shareholders on Wednesday that both sets of directors were of the view that the corporate restructure would provide a simpler and more efficient structure that would eliminate unnecessary corporate overhead in managing the Sugec relationship.

The restructure was conditional upon shareholder approval, as well as any regulatory approvals required.

At the end of March this year, Sovereign announced that it would spin out its subsidiary Mount Adrah Gold into a separately listed company during the second quarter of the year.

Mount Adrah, which is 72% held by Sovereign Gold, also has a portfolio of prospecting gold projects in New South Wales.