Sovereign Mines of Africa to become cash shell after Mandiana farm-out

Sovereign Mines of Africa (SMA) has agreed to farm-out its 75% interest in the Mandiana Gold Project, in Republic of Guinea, to Volcanic Metals Corp.

It said the farm-out would be effected by the sale of all the outstanding share capital of Sovereign Mines of Africa Ltd, a wholly-owned subsidiary of the company and 75% owner of a series of mining permits associated with the Mandiana Gold Project.

The deal remained subject to a number of conditions. In consideration, SMA would receive common shares in Volcanic Metals Corp representing 9.9% of its issued share capital.

The farm-out constituted a cessation of all of the company's existing trading business under AIM rules, and on completion it would become a cash shell.

As a cash shell it must make an acquisition or acquisitions that constitute a reverse takeover within six months, or be suspended.

SMA said it had entered into an exclusivity agreement to acquire new assets in the mining industry, and was carrying out detailed due diligence on these.

Further announcements will be made in due course.

At about 16:26 GMT, shares in SMA were down 20.69% to 0.58p.