TORONTO (miningweekly.com) – Australia-focused Vista Gold on Thursday announced that it had entered into an agency agreement to sell up to 16-million shares in its 24.9% interest in gold explorer Midas Gold to certain arm's-length parties at a price of C$0.80 a share.

Should all 16-million shares be sold, Vista’s holdings in Midas would be reduced to 15.8-million shares, from 31.8-million, representing a 12.4% interest.

The agreed sale price of C$0.80 a share represented a discount of about 17.5% to Midas’ closing price on the TSX of C$0.97 a share on Thursday.

The agency programme was expected to close by February 14.

Vista said it had agreed to hold on to its remaining interest in Midas for a period of eight to twelve months, depending on the final proceeds from the programme.

In a separate press release, Midas said that it understood that all 16-million shares of Midas had been placed, meaning Vista’s remaining interest would be locked up for a year.

Vista acquired 31.8-million shares in Midas after completing an arrangement in 2011, whereby Midas acquired the Yellow Pine deposit from Vista, which comprises a core asset of Midas’ 100%-owned Golden Meadows gold project in Idaho.

Desjardins Capital Markets Research analyst Adam Melnyk said the announcement had a potential negative implication in the near to medium term for Midas owing to the 17.5% discount offered by the agency programme, compared with current trading levels.

“We also believe that the spectre of any future sales of Vista’s remaining interest in Midas could be viewed as an overhang by the market.

“Despite this, we continue to believe that Golden Meadows falls into a select peer group of large-scale gold assets not controlled by major mining companies and located in politically stable, mining friendly jurisdictions. We note that the company’s management has a strong background in advancing and permitting projects, and view this experience as paramount in terms of keeping the permitting and development of Golden Meadows on track,” he said in a note to clients.

“In our view, Midas could attract suitors interested in purchasing the asset over the long term.”