Gem Resources (LSE:GEMR) announced it has agreed to sell its entire interest in Gravelotte Emerald Mine in Limpopo Province, South Africa, for consideration that could reach $2.4 million, as the London-listed natural resources company pivots toward gold processing.
The London-listed company is disposing of Gem Venus Holdings Proprietary, the entity holding its interest in Gravelotte, to Global Gem Mines under a conditional sale and purchase agreement; the fixed purchase price is $1.7 million, structured across several tranches.
First, $400,000 is to be paid into escrow on signing, with $250,000 due directly to Gem Resources 180 days after signing, $650,000 plus the escrowed sum on completion (taking cumulative cash received to $1.3 million), and two further $200,000 payments before the first and second anniversaries of completion.
On top of the fixed price, Gem Resources retains a 5% gross revenue royalty on rough emeralds mined and sold from Gravelotte for up to two years after completion, capped at an aggregate $700,000, which produces the potential $2.4 million total.
The disposal comes after the company agreed the acquisition of the El Yarumo gold processing operation in Cauca, Colombia, announced on 8 September. The deal sees Gem Resources' subsidiary acquiring CREC Material Co S.A.S. for 150 million new shares priced at 0.5p each, valuing that deal at £750,000.
"Together with the El Yarumo acquisition, the disposal demonstrates the direction in which we are taking GEMR: recycling capital from existing assets, reducing funding commitments and directing our resources towards opportunities offering earlier revenue, cash flow and scalable growth in gold processing," said Louis Ching, Executive Chairman of Gem Resources.
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The board says the disposal lets it monetise value built at Gravelotte while cutting its future funding commitment to the project and keeping exposure to production through the royalty.
Following completion, and independently of the El Yarumo acquisition, Gem Resources will retain a 65% interest in Prasinus Exploration, owner of the Curlew Emerald Mine in Western Australia's Pilbara region, where it holds the right to acquire the remaining 35% and is evaluating a phased restart of production, along with an exploration licence in north-east Zambia prospective for graphite, coltan, lithium and rare earth elements.
The company said it will provide further updates as the transactions progress.