Two law firms have worked with each other on the sale of a major gold project to ASX-listed Malachite Resources.
Brisbane law firm Hopgood Ganim has advised Volga Elderberry on the sale of the Lorena Gold Project in North West Queensland to Malachite, which was advised by law firm Kemp Strang in Sydney.
Malachite agreed to acquire 100 per cent interest in the Lorena Gold Project. In the share sale agreement, the company acquired 350 million Malachite shares, priced at six cents each, a total of $21 million.
The deal is “basically a merger of two companies”, Dr Gary Lowder, managing director of Malachite Resources told Boardroom Radio.
The merger is between publicly listed Malachite and Volga Elderberry, a privately owned company. Volga Elderberry owns the deposit and the project at the present time, he said.
“We know the Volga people pretty well and we’ve been in business with them before. And basically when they looked at what they had found at Lorena they came to us and said ‘well our options are to list our company in our own right, or to get together with you guys’. And we said getting together with us is the way to go. So after quite a while of discussion and negotiation we’ve came up with the deal we announced,” Lowder said.
In the share sale agreement, the 14 shareholders in Volga Elderberry are selling their shares in that private company to Malachite, in return for Malachite shares. There is no cash involved, and then shareholders become major shareholders in Malachite instead.
Lowder said drilling is expected to begin in March next year. “It’s never been drilled below 100 metres, so there is potential at depth,” he said. The company will not drill through the peak summer, when it’s too hot.
Hopgood Ganim partner Michael Hansel, who lead the firm’s team advising on the sale, near production gold projects are highly sought after as a result of dramatic increase in gold prices.
“As a result of the share issue, the sellers of Volga Elderberry now have a 66 per cent shareholding in Malachite,” Hansel said.
“The two parties took a collaborative approach to this transaction, and worked together closely throughout the sale process to negotiate and complete the deal within a short time frame.”