True Gold Mining (TGM.V) (previously Riverstone Resources) announced it came to an agreement with Liberty Metals and Mining whereby Liberty will purchase 52.7M shares of True Gold at a price of C$0.33/share (which was higher than the market price) for a total consideration of C$17.4M.
Liberty Metals also agreed to buy a 2% NSR on True Gold’s Karma project in Burkina Faso for C$6.04M in cash. It seems like Liberty is paying a relatively low price for the royalty considering the project is expected to produce between 70,000 and 90,000 ounces of gold per year at a low cash cost of just $525/oz. The feasibility study for the Karma project is expected in Q4 of this year. Riverstone has the right to repurchase 50% of the NSR for a payment of $12.5M before the end of Q1 2014 and another 50% can be bought back at fair market value after three years of commercial production.
Upon the closing of these two deals, True Gold will have an enterprise value of approximately C$44M.
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Disclosure: The author holds a long position in TrueGold Mining. Please see our disclaimer for current positions.
