Empire Metals sells stake in Georgian copper and gold project for US$3.3mln

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Empire Metals Ltd (LON:EEE) has sold its 50% stake in Georgian Copper & Gold JSC for US$3.3mln cash that it says will put it “in a strong financial position to continue to create shareholder value”.

The buyer, Caucasian Mining Group, will make a single cash payment.

Empire has also agreed with Candelaria Mining Corporation to mutually terminate their agreed deal, as Caucasian Mining took up its right of first refusal (ROFR). 

Empire’s board concluded that the Candelaria offer is the best option available to the company and will allow it “to move forwards from the untenable situation in Georgia and focus its resources and efforts on the company’s new strategy of exploration and development”.

The new focus is principally within the Western Australian gold sector, where it has interests in the Eclipse and Central Menzies gold projects.

READ: Empire Metals acquires option to buy majority stake in the Central Menzies gold project

Mike Struthers, director of Empire Metals, said: “After our entry into Georgia in 2015 and two years of successful exploration we had created a good foundation for growth in the country, but since early to mid-2018 external factors started to turn against us. 

“Despite sustained and determined efforts by the company on many different fronts for nearly three years to unlock the challenges being faced, it is evident that the joint venture in Georgia is no longer sustainable.

“Furthermore, although the company has appealed the decision by the Mining Agency to withdraw the majority of the original licence area there is little confidence in a successful outcome; and the sale and purchase agreement with Candelaria Mining cannot be executed because although CMG indicated their desire to exercise their ROFR, the company had no confidence in receiving the full consideration offered by Candelaria and this dispute can only be settled through lengthy and expensive arbitration.

“The board has therefore concluded the best outcome for shareholders is to bring this chapter in the company’s history to a close and to focus our resources and efforts elsewhere.

“Our efforts in Australia are already bearing fruit, and the recent addition of the very prospective Central Menzies Project has further strengthened our presence in the gold sector in WA and provided a real platform for growth.

“This injection of capital will ensure we are well funded for further exploration and project development works at our Eclipse Gold Project; for the initial work programme at our Central Menzies Gold Project; and, if justified, also funded to exercise the option at Central Menzies.

“I and the rest of the board look forward to supporting our new MD Shaun Bunn as we develop real value through our assets in Australia.”

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