Dartmouth's Erdene to sell Georgia property
Erdene Resource Development Corp. has entered into an agreement to sell one of its Georgia properties.
The Dartmouth junior mining company announced the definitive agreement Tuesday, through wholly owned subsidiary ERD Aggregate Corp., that it intends to sell its 100 per cent interest in the Granite Hill property for $3.35 million to an undisclosed third party.
“It’s private at the request of the (purchaser) at this point,” said company president and CEO Peter Akerley.
The transaction is expected to close within the next 40 days.
The 138-hectare property in central Georgia recently began mining, processing and selling aggregate for the U.S. construction industry, but Akerley said the company had been looking at monetizing what it deems a non-core asset for the last year.
The sale means the company can focus on its 25 per cent stake in the Donkin coalfield in Cape Breton and its metals interests in the South Gobi region of Mongolia.
“It really comes back to focusing our resources, including our financial resources, on the projects that we see as having the greatest potential to bring value to our shareholders,” Akerley said.
“So the way I look at it is that, if we were to go into the equity markets today and dilute, we would be losing more because of the value we see in the future of Mongolia and Donkin.”
Last month, Xstrata Coal Canada Ltd., which had been the operating partner in the Donkin coal deal, announced that it would be selling its 75 per cent stake and moving on to bigger projects.
Under the joint-venture agreement, Xstrata Coal will fund the first $10 million of Erdene’s development funding requirement, up to $1 million of which will be used to cover Erdene’s share of expenditures on the project during the sale process.
As a result of this, Akerley said the Georgia transaction was very important to Erdene financially.
“It allows us to carry on our planned programs, largely in Mongolia, well into 2013 while we work through the process of bringing in a new partner for the Donkin project,” he said.
Meanwhile, the Donkin sale process is moving to the next stage.
“It is the intent of Xstrata to have Citibank initially contacting potential parties, interested parties, before the end of May,” Akerley said.
In Mongolia, the company is hunting for copper, molybdenum and coal on 260,000 hectares of land it controls within 300 kilometres of the Chinese border. Erdene has estimated that it has minerals worth about $8 billion in the ground there.
The company is considering spinning off its Mongolian mineral prospects into a separate company.
“We continue to see that as the right path for the company,” Akerley said.
“We feel that investors prefer two distinct investment propositions, so that continues to be a plan. In this period of weaker markets, we are going a little bit slower with that approach but we continue to head in that direction and we’ll continue to evaluate that.”
Erdene’s shares were trading at 33 cents on the Toronto Stock Exchange on Tuesday, up four cents from the previous close.
(rzaccagna@herald.ca)
The Dartmouth junior mining company announced the definitive agreement Tuesday, through wholly owned subsidiary ERD Aggregate Corp., that it intends to sell its 100 per cent interest in the Granite Hill property for $3.35 million to an undisclosed third party.
“It’s private at the request of the (purchaser) at this point,” said company president and CEO Peter Akerley.
The transaction is expected to close within the next 40 days.
The 138-hectare property in central Georgia recently began mining, processing and selling aggregate for the U.S. construction industry, but Akerley said the company had been looking at monetizing what it deems a non-core asset for the last year.
The sale means the company can focus on its 25 per cent stake in the Donkin coalfield in Cape Breton and its metals interests in the South Gobi region of Mongolia.
“It really comes back to focusing our resources, including our financial resources, on the projects that we see as having the greatest potential to bring value to our shareholders,” Akerley said.
“So the way I look at it is that, if we were to go into the equity markets today and dilute, we would be losing more because of the value we see in the future of Mongolia and Donkin.”
Last month, Xstrata Coal Canada Ltd., which had been the operating partner in the Donkin coal deal, announced that it would be selling its 75 per cent stake and moving on to bigger projects.
Under the joint-venture agreement, Xstrata Coal will fund the first $10 million of Erdene’s development funding requirement, up to $1 million of which will be used to cover Erdene’s share of expenditures on the project during the sale process.
As a result of this, Akerley said the Georgia transaction was very important to Erdene financially.
“It allows us to carry on our planned programs, largely in Mongolia, well into 2013 while we work through the process of bringing in a new partner for the Donkin project,” he said.
Meanwhile, the Donkin sale process is moving to the next stage.
“It is the intent of Xstrata to have Citibank initially contacting potential parties, interested parties, before the end of May,” Akerley said.
In Mongolia, the company is hunting for copper, molybdenum and coal on 260,000 hectares of land it controls within 300 kilometres of the Chinese border. Erdene has estimated that it has minerals worth about $8 billion in the ground there.
The company is considering spinning off its Mongolian mineral prospects into a separate company.
“We continue to see that as the right path for the company,” Akerley said.
“We feel that investors prefer two distinct investment propositions, so that continues to be a plan. In this period of weaker markets, we are going a little bit slower with that approach but we continue to head in that direction and we’ll continue to evaluate that.”
Erdene’s shares were trading at 33 cents on the Toronto Stock Exchange on Tuesday, up four cents from the previous close.
(rzaccagna@herald.ca)
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