Toronto-listed Argonaut Gold has entered into an agreement to sell its Ana Paula gold development project, in Mexico, as its focus continues on the development of its Magino gold project, in Ontario, Canada.
Argonaut, which acquired Ana Paula through the recent merger with Alio Gold, would receive $30-million on closing, C$10-million upon commencement of construction and a 1% net smelter royalty for the project.
In addition, it would also receive 9.9% of the shares of the acquiring company, which would will be formed by a business combination of 1252201 BC (AP Mining) and Pinehurst Capital II, creating a new publicly traded gold development company.
"When you consider the value of Alio Gold when we announced the at-market merger less than six months ago, you can begin to recognise the tremendous value-creation opportunity Argonaut's board and management saw at the time of the merger,” said Argonaut president and CEO Pete Dougherty.
“The proceeds of this transaction support Argonaut's focus on the development of our Magino gold project in Ontario, Canada by providing upfront capital while still providing Argonaut shareholders with upside participation in the Ana Paula project through Argonaut's equity ownership in the resulting issuer, a contingent payment upon a construction announcement and a royalty.”
The resulting issuer would be led by former Timmins Gold CEO Bruce Bragagnolo. Timmins Gold was a previous owner of Ana Paula.