Austral Gold selling Argentina project to E2 for US$10 million
Austral Gold Ltd. [AGLD-TSXV, AGD-ASX] has agreed to sell its Pinguino polymetallic project in Argentina to Australia Stock Exchange-listed E2 Metals Ltd. [E2M-ASX] for about US$10 million.
The asset is held by SCRN Properties Ltd., a unit of Austral’s subsidiary Austral Gold Canada Ltd. Under the terms of the agreement, E2 will acquire SCRN for a combination of cash and shares and options. Upon completion, Austral Canada will be the largest individual shareholder in E2 with a 19.9% stake.
The silver-gold-zinc-lead-indium Pinguino project is an advanced-stage development project located in the south-central part of Argentina, 30 kilometre sfrom E2’s flagship Conserrat project. “This transaction with E2 Metals will enable us to share in the project’s potential upside and use the proceeds from the sale to fund our exploration activities in Argentina and Chile,’’ said Austral Gold CEO Stabro Kasaneva.
Under the transaction, Austral will receive US$5.0 million cash, of which US$2.5 million is to be paid on closing and the remaining 50% in three annual installments. E2 will issue from treasury an amount of shares to E2 that is equal to a 19.99% interest in the company and valued at around US$4.4 million.
Austral will also receive 15 million options, each exercisable for one ordinary share of E2 at an exercise price of 26 cents until the third anniversary of the closing date. The value of the options is estimated to be worth US$600,000. Austral can appoint one nominee to the E2 board. It will also retain a 2.0% net smelter return royalty on the Pinguino project.
On November 24, 2022, Austral shares closed at $0.04 and currently trade in a 52-week range of $0.09 and $0.035.
Austral Gold is a growing gold and silver producer which has built a portfolio of assets in Chile, Argentina and the U.S. The company’s flagship asset is the Guanaco/Amancaya gold and silver mine complex in Chile. Other assets in its portfolio include the 100%-owned Casposo Mine in Argentina, the 26%-owned Rawhide Mine in the U.S., and exploration projects in both Argentina and Chile.
The Guanaco mine is located in the Paleocene/Eocene belt, a structural trend that runs north/south through the centre of northern Chile. The mine was recommissioned by Austral Gold in 2010 and commenced operations in 2011. The Amancaya project, located 75 kilometres south of Guanaco, was acquired by the company in 2014 from Yamana Gold, which held a 2.25% royal interest in precious metal production. Austral started open-pit mining operations in March 2017. Ore is transported to the agitation leach plant at Guanaco for processing.
The Casposo mine is a low-sulphidation epithermal deposit of gold and silver located in San Juan Province, Argentina. It consists of an underground mining operation and processing plant that is currently on care and maintenance after producing 529,861 ounces of gold equivalent from 2010 to 2019. The mine is approximately 150 kilometres from San Juan, the capital of San Juan province and covers an area of 100.2 square kilometres.