JOHANNESBURG (miningweekly.com) – TSX-V-listed Helio Resource Corp has rejected Aim-listed Shanta Gold’s termination of an arrangement agreement with Helio and says it will “vigorously” enforce its rights under the agreement.
Shanta in June agreed to buy Helio in a £3.5-million all-scrip deal that would have given it control of Helio’s assets adjacent to its own New Luika mine, in Tanzania. However, in August, the company announced that it would terminate the agreement owing to the potential impact on Helio of new mining legislation in Tanzania.
“We strongly disagree with Shanta's assertion that the recent changes to Tanzania's mining laws amount to a material adverse effect as defined in the arrangement agreement and reject their opportunistic attempt to walk away from their obligations.
“We believe that combining Shanta and Helio continues to make sense for both companies and are disappointed that our partner in this transaction chose to take this drastic step without any prior discussions,” Helio CEO Richard Williams said in a statement issued on Wednesday.
Helio stated that the arrangement agreement remains in effect and that it expects Shanta to satisfy its obligations thereunder, including taking all reasonable actions to complete the transaction.
In response, Shanta said it had validly terminated the arrangement agreement.
“Shanta's position, and advice, remains that it had clear and compelling rights to terminate the arrangement agreement,” it stated.