Aim-listed gold producer Goldplat is progressing plans to divest of its mining operations, announcing on Friday that it would sell its Kenya underground operation, Kilimapesa, to investment firm Mayflower Capital Investments.

Goldplat, which is focusing on gold recovery operations in South Africa and Ghana, said its subsidiary Gold Mineral Resources (GMR) had entered into a binding term sheet with Mayflower for the sale of Kilimapesa.

GMR would receive an initial consideration of $1.5-million, settled in Mayflower shares. In addition, GMR is entitled to receive a 1% net smelter royalty on future production from Kilimapesa capped at $1.5-million.

Mayflower has separately entered into an agreement under which it would assign its rights and obligations under the term sheet to a company listed on the LSE, called UKco, which would seek to complete the acquisition and raise a minimum $4-million of funding for the development of Kilimapesa's operations.

Goldplat said GMR was supportive of Mayflower's plans and strategies for the Kilimapesa operations and had agreed to escrow its shares in Mayflower/UKco for a minimum of 12 months, while Mayflower completed the recapitalisation and recommencement of the gold mining and processing operations.

“Mayflower already has a team in place in Kenya and with financing, I believe, has the ability to extract significant value from the tenements under the control of Kilimapesa.  Through its shareholding in Mayflower, Goldplat can continue to benefit from the development of Kilimapesa without being required to provide further finance or management resources,” Goldplat CEO Werner Klingenberg said.

The term sheet is subject to a number of conditions precedent including the completion of due diligence, the receipt of all necessary approvals, the finalising of formal agreements and the raising of equity by UKco of $4-million.

Mayflower is paying a $50 000 non-refundable exclusivity fee under the binding term sheet, and, unless otherwise agreed by the parties, the formal agreements envisaged in the term sheet must be entered into before September 30.

In the interim, and in addition to the considerations above, GMR and Mayflower have agreed that Mayflower will invest up to $300 000 and GMR up to $150 000 into Kilimapesa as a loan to restart the treatment of artisanal tailings at Kilimapesa's processing plant.

The loan will be unsecured and interest free and repayable out of profits generated from tailings processing after payment of current and historical creditors.