The acquisition has been brought forward ahead of completion of the planned reverse takeover (RTO) of Papillon Holdings by Mayflower which will create a new London Stock Exchange listed gold producer in East Africa called Caracal Gold.
Operations recommenced in 2020 after a period of 18 months on care and maintenance following the remedy of several historic issues and the plant continues to operate and gold sales are continuing under existing gold refining agreements in Europe.
Additionally, underground mine operations have commenced, which have resulted in higher grade ore now feeding the plant.
Upon completion of the transaction and the RTO, Caracal Gold will hold a 100% interest in the mine, which currently has a 671,446 oz JORC Compliant resource and a well-defined mining optimisation strategy in process.
Significantly, the acquisition allows Mayflower to proceed with planned capital investment activities and operational changes at Kilimapesa ahead of completing the RTO that will further benefit Papillon shareholders through accelerated development and production timelines.
Papillon’s executive director Charles Tatnall commented, “We are delighted with the excellent progress made including the accelerated acquisition of Kilimapesa, which significantly de-risks the transaction for our shareholders. The focus for all parties is now on investment activities and operational changes on site at Kilimapesa given the accelerated development and production timelines.”
The initial consideration receivable by Gold Mineral Resources Ltd (GMR), Goldplat’s subsidiary, is in the form of a secured debenture of US$1.5 million, to be satisfied by cash and/or the issue of shares to that value in Papillon payable on Papillon’s re-admission to trading on the LSE following completion of the RTO, with 30% (US$450 000) of the initial consideration payable in cash.
“Mayflower has proven its commitment over the last 8 months to Kilimapesa Gold Mine through investment of capital and management resources and has raised further cash of US$2 million to advance the project”Werner Klingenberg – CEO, Goldplat
If Papillon is not re-admitted to trading on the LSE by 16 July 2021, the full initial consideration of US$1.5 million will become payable in cash and will attract an interest of 4% with effect from 1 January 2021.
As part the conditions to complete the transaction, and additional to the initial consideration, Mayflower has agreed to pay US$150 000 of the loan balance outstanding from Kilimapesa to GMR and Mayflower Gold and Mayflower have waived all further conditions, specifically the conditions regarding the renewal of the prospecting license.
Earlier in April, Mayflower raised approximately US$2 million of funding and has undertaken to use this towards meeting Kilimapesa’s capital expenditure and working capital requirements.
In addition, Mayflower has secured a further £2.5 million conditional on completion of the RTO and re-admission of Papillon to trading on the LSE.
Mayflower Gold have provided GMR with a debenture over their assets, with Mayflower acting as guarantor and have committed to a further charge to be provided by Kilimapesa over its assets for the benefit of GMR.
The Novation Agreement assigning to Mayflower Gold the loan outstanding from Kilimapesa to GMR of approximately US$10 million will only complete once the initial consideration of US$1.5 million has been received.
With the completion of the sale of Kilimapesa, GMR is entitled to receive a 1% net smelter royalty on all production from Kilimapesa up to a maximum of US$1.5 million, on any future production from Kilimapesa.
Werner Klingenberg, CEO of Goldplat, commented: “I am extremely pleased that we have been able to complete the sale of Kilimapesa to Mayflower Gold. Mayflower has proven its commitment over the last 8 months to Kilimapesa Gold Mine through investment of capital and management resources and has raised further cash of US$2 million to advance the project. We believe that it was opportune for us to complete the transaction at this stage to allow the Mayflower team to implement their strategic initiatives and to ensure the success of the Kilimapesa Mine for all stakeholders involved. This releases Goldplat from any further financial or management requirements and allows us to focus on our continued recovery operations.”