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agreement to acquire the Lonely Gold Mine.
The acquisition of the gold mine, for US$4,4 million, is expected to result in the resuscitation of operations at the mine, which has historical underground production of up to 1,1 million ounces of gold.
The mine, located about 80km north of Bulawayo in the gold producing Bubi greenstone belt, was the largest single gold producer in the area until its closure in the mid-1990s.
In a statement, ElDore said the potential for resuscitation of operations at Lonely would follow the completion of due diligence within the next couple of months.
“EDM has agreed to acquire the Lonely Gold Mine in Zimbabwe for an equivalent total consideration of US$4,4 million.
“The company has executed a Heads of Agreement with the vendors to acquire a 100 percent interest in the Lonely Mine, subject to due diligence, regulatory and shareholder approval. This agreement is subject to due diligence, which will be carried out over the next 60 days, and EDM obtaining shareholder and regulatory approval,” said the company. ElDore said it would pay the seller US$2,4 million in cash and US$2 million in shares.
Half of the shares will be payable upon settlement and the other half on first production pour of 20kg, or 643 ounces of gold.
The same milestones will determine the cash payment with US$500 000 paid on settlement and US$1,9 million on gold pour.
The company has also appointed two interim directors, Mr Craig Willis and Mr Richard Griffin, who will, however, be replaced by key appointments once the Lonely Gold Mine purchase has been completed.
EDM also said it has elected to reduce its interest in its Burkina Faso project to 27,9 percent of all approved and budgeted exploration expenditure to maintain its interest in the project while focusing its financial resources on the Lonely Mine.
The ASX-listed firm is, however, yet to indicate how it will comply with the country’s indigenisation programme, which entails that at least 51 percent of foreign companies’ equity should be in the hands of locals.
ElDore Mining Corporation Limited is a junior resource company with a focus on copper and gold exploration in the Western Highlands Province of Papua New Guinea, Burkina Faso in West Africa and Stei, Transylvania in West Romania.
Completion of the transaction will see ElDore joining other foreign junior gold producers operating in Zimbabwe, namely Caledonia Mining Corporation, which runs the Blanket Mine, and Toronto Stock Exchange-listed New Dawn Mining Corporation, which owns a number of gold mines in the country.
The coming on board of the Lonely Mine will provide further impetus to the growth of Zimbabwe’s gold sector, which is estimated to have produced in excess of 12 000kg of the precious mineral last year.