Valor Resources Ltd [ASX: VAL] announced yesterday they’ve completed the settlement on the sale for their Radio Gold Project located in Western Australia, around 400km from Perth.
Valor Resources is an ASX listed mineral explorer with projects in Peru. The company acquired an interest on the Radio Gold Project last year. The mine has a historical production of over 72,000 ounces at 38.5 grams per tonne gold.
What’s the deal?
On 14 April, Valor Resources revealed they had entered into an agreement to sell the Radio Gold Project to Summit Resource Holdings Pty Ltd, a fully owned subsidiary of Nu-Fortune Gold Limited.
According to the agreement, Valor Resources would receive $900,000 in cash for the project, which is planning to fund their projects in Peru.
As the CEO Dr Nick Lindsay commented back in April:
‘Valor entered in an agreement to acquire an initial stake and then subsequently farm-into the Radio Gold Project. The Project has strong merits and Valor was pleased to own it. However, Valor was caught out by the swiftness of the deterioration in capital markets in recent weeks and as such is not in a position to continue to fund the capital required to progress the asset. Given this scenario, divesting the asset was crucial to underpinning Valor’s ongoing viability and so whilst we are disappointed not to be able to progress with Radio, we are pleased we can fortify our balance sheet and weather this current environment and focus on our remaining highly prospective Peruvian assets.’
According to the agreement, Valor Resources was to receive the $900,000 amount through a $50,000 initial deposit. Then $700,000 in the next 30 days of the agreement and the remaining $150,000, which were a reimbursement of expenses from the project, in three $50,000 instalments to be paid after completion.
Valor Resources announced yesterday a modification of the terms in where they agreed to a $20,000 discount on the final $150,000 expense payment if the buyer paid this sum prior to competition. Valor Resources has received a total of $880,000 and has completed the deal.
Valor Resources confirmed they are no longer involved in the Radio Gold tenement.
What could this mean for Valor?
Shares opened 50% higher this morning at $0.002, but have gone back down to $0.001 at time of writing. The recent transaction raises plenty of questions on if, even with the sale, the company will need more cash, especially since Peru is one of the countries getting hit hard by COVID-19. Since the beginning of the year, Valor Resources’ shares have lost 80% of their value.
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