Chinese Company Acquired Chalice’s 60% Stake in Eritrea

Chalice Gold goes Red for China

By Chalice Gold Mines,

Chalice Gold Mines (ASX: CHN; TSX: CXN) announces that it has entered into a conditional shortform agreement (the “Agreement”) to sell its remaining 60 per cent stake in the Zara Project in Eritrea to China SFECO Group (SFECO), a subsidiary of Shanghai Construction Group Co. Ltd.
This follows the agreement in July 2011 pursuant to which Chalice agreed to sell a 30% interest in the Zara Project to the Eritrean National Mining Corporation (“ENAMCO”) which is in addition to the 10% carried interest in the project already held by ENAMCO.

Under the Agreement, SFECO will pay Chalice US$80 million in cash for Chalice’s share of the mineral resource at the Koka gold deposit. In addition, SFECO will pay Chalice a further sum, not to exceed US$20 million for the balance of the area falling within the Zara Project (including Zara North, South and Central). This figure is to be agreed between the parties and, failing agreement, will be determined by binding independent arbitration to a cap of US$20 million.

Chalice has also agreed that it shall not solicit or be involved in discussions or negotiations concerning the sale of its shares in ZMSC until completion of SFECO’s due diligence or, until completion if the SFECO confirms it is satisfied with its due diligence, but subject to a carve out allowing the Chalice directors to discharge their fiduciary and statutory duties where there is a superior proposal.

The parties will prepare more formal transaction documents incorporating usual terms and reflecting the current short form agreement.

Assuming completion of the Transaction, Chalice would be liable to pay tax to the Eritrean Government on the SFECO and ENAMCO proceeds at a rate of 38%. This will be calculated after deducting the Company’s share of project-to-date costs of at least ~US$30 million (subject to audit).
——————–

SHANGHAI CONSTRUCTION SAYS TO ACQUIRE ERITREA GOLDMINE

By Reuters,

A subsidiary of Shanghai Construction Group Co. Ltd. will acquire gold mining assets in Eritrea, according to a company announcement.

Shanghai Construction will acquire a 60% equity stake in Zara Mining Share Co. for US $80 million, the statement said, citing a framework agreement signed by the two companies.

The deal also gives Shanghai Construction the option to acquire additional mining rights from Zara for areas where gold reserves have not yet been confirmed.

Shanghai Construction will conduct the acquisition through wholly-owned subsidiary China Shanghai (Group) Corporation for Foreign Economic & Technological Cooperation (SEFCO Group).

SEFCO is involved in various infrastructure projects overseas, including Vietnam, where it is building a 40,000-seat stadium in the capital Hanoi, a coal-fired thermal power plant, and a conference center, according to its website.

The company is also building a liquified petroleum gas pipeline and terminal project in Pakistan and has worked on some of Shanghai’s highest-profile infrastructure projects, including the Shanghai World Financial Center, the country’s tallest skyscraper.
————————-

SHANGHAI CONSTRUCTION TO ACQUIRE 60% STAKE IN ERITREAN MINING CO.

By Capital Vue,

Shanghai Construction Group approved a plan by its wholly-controlled subsidiary, SEFCO Group, to acquire a 60 percent stake in Eritrean gold mining company, Zara Mining Share Co., for $80 million, reports Shanghai Securities News, citing a company filing.

SEFCO Group may make further cash payments to acquire additional mining rights from Zara Mining Share.

The target company has exploration and mining rights to an area covering 147 kilometers. Its mining rights to the Koka Gold Deposit in northern Eritrea is valid for a period of 18 years.

ENAMCO, which has a 40% stake in Zara Mining Share, has given its approval to the transaction.

SEFCO Group will soon engage a third party to investigate the assets, liabilities and financial status of the target company.

According to Shanghai Construction, should the acquisition succeed, it will obtain stable investment returns and about one billion yuan worth of mine construction contracts, expanding the scale of its business in Eritrea.
—————————-

SHANGHAI CONSTRUCTION TO BUY AFRICAN GOLD MINE

By SinoCast Daily,

Shanghai Construction Group Co., Ltd. announced on December 27 that its board allowed China Shanghai (Group) Corporation for Foreign Economic Technological Cooperation (China SFECO Group), a wholly-owned subsidiary under the company to buy 60% equities in ZARA Mining Share Company in the State of Eritrea.

The subsidiary is also permitted to sign a conditional framework agreement with ZARA Mining. According the framework agreement, the acquisition consideration consists of USD 80 million (equivalent to CNY 508 million) and another payment separately discussed for mining equities of the area whose reserve is yet to be verified.

As a company indirectly established by Chalice Gold Mines Ltd. (asx:CHN) in the State of Eritrea, ZARA Mining is mainly in charge of KOKA gold mine exploitation. It now holds exploration and exploitation rights of 147-square-kilometer area in ZARA mineral region and 18-year mining rights of KOKA gold mine. The Eritrean National Mining Corporation (ENAMCO) is the other shareholder of ZARA Mining, owning 40% equities in the latter. The ENAMCO has agreed that Chalice Gold Mines would transfer 60% equities in ZARA Mining to China SFECO Group.

The company said it would get stable investment return and mines and mine plants totaled around CNY 1 billion if such equity acquisition was finished and the gold mine was exploited smoothly. Shanghai Construction Group believes this will help it to further enlarge its business scale in the State of Eritrea.
——————-

Advertisements

One response to “Chinese Company Acquired Chalice’s 60% Stake in Eritrea

  1. Pingback: Gold Will Soon Reach $2,350 an Ounce: Grandich | .:TesfaNews:.

Comments are closed.