Sovereign Mines of Africa has entered into an agreement with Volcanic Metals Corporation to farm-out its 75% interest in the Mandiana gold project in Guinea, West Africa.
This comes as the board of the AIM-listed company has decided not to continue funding the development of its Guinean assets after conducting a strategic review.
The farm-out will be effected by the sale of all the outstanding share capital of Sovereign Mines of Africa Ltd., a wholly-owned subsidiary of the company which owns a series of mining permits associated with the Mandiana gold project. The company will receive common shares in Volcanic Metals Corporation representing 9.9% of the company’s outstanding share capital.
The farm-out of Mandiana forms part of Sovereign Mines of Africa’s overarching strategy to enhance shareholder value; the company intends to hold its interest in Volcanic Metals Corp for such time needed to maximise shareholder value.
Meanwhile, the company has entered into an exclusivity agreement to acquire new assets in the mining industry, and is performing a detailed due diligence on these.
Giles Clarke, Chairman of Sovereign Mines of Africa said the farming out of its Mandiana interest is an important step for the company and realises immediate value for shareholders, while Sovereign Mines of Africa retains an interest in the future of the project.
“The company is in a transitional period, whilst we execute our new vision following a detailed strategic review, which includes a potential acquisition within the mining industry. We look forward to updating our shareholders further on these activities in due course.”