Metminco selling Los Calatos interest to CD Capital for $5m

Metminco announced on Wednesday that it had executed a binding agreement with CD Capital Natural Resources Fund III LP to sell its 49% interest in Los Calatos Holding Limited - owner of the Los Calatos Project in Peru - for approximately $5m cash consideration, net of costs.

The AIM-traded firm said the LCH Sale was the culmination of a re-positioning of Metminco toward becoming a gold producer in the near term.

Monetisation of the company's interest in the Los Calatos Project would provide funding for the ongoing development of its Miraflores Gold Project, the board said, which is part of the Quinchia Gold Portfolio in Colombia.

As previously announced, the company was currently completing a feasibility study on the Miraflores Gold Project with expected completion during the third quarter.

An environmental impact study (EIA) on the project was expected to be submitted to the Colombian authorities by the end of 2017.

The board, after what it described as “detailed consideration”, formed the view that on balance it was in the best interests of the company and its shareholders to monetise its interest in the Los Calatos Project and to direct the proceeds of the sale towards the development of the Miraflores Gold Project to provide a non-dilutive form of financing for ongoing work programs.

It said the LCH Sale, which remained subject to successful resolution of a number of tax related matters, was anticipated to be completed by the end of June 2017 but in any case no later than 11 July 2017.

“The company has gone through a transitional period in the last 18 months resulting in its focus moving towards developing the highly attractive and potentially economically accretive Quinchia Gold Portfolio,” said managing director William Howe.

“Los Calatos has been an important asset in the development of the company, however, the opportunity to release these funds will enable the Company to take the Miraflores project through to a decision to mine, when the real value can be achieved.

“We envisage development of the Miraflores Gold Project to be the first leg of the company's strategy to transition into a significant gold producer.”

The 100% owned Quinchia Gold Portfolio also included the Tesorito, Dosquebradas and Chuscal gold targets, all of which the board believed had the potential to increase targeted mine life and annual gold production, Howe explained.

“The Quinchia Gold Portfolio is a high quality gold asset that is located in the Cauca region of Colombia, a region which we believe is increasingly becoming more prospective and attractive to investment.”