Asante Gold Corp (CVE:ASE) has updated shareholders Thursday with respect to the previously announced acquisition of a 1 percent net smelter return (NYSE:NSR) royalty on PMI Gold's (TSE:PMV) Obotan gold project in Ghana, saying the royalty holder has not yet received the necessary consent for the deal.
In November last year, Asante said it would buy the 1 percent royalty Goknet Mining Company holds on the PMI property, for consideration of $22.5 million in stock.
Asante said in a statement Thursday that Goknet has not yet received the necessary third party consent, and that it will take "all actions" necessary to obtain the approval.
Goknet has referred the matter to binding arbitration, the statement said, with a decision expected by the end of April.
According to the release, Goknet has confirmed to Asante that it holds a 2% NSR royalty interest in all the concessions held by PMI Gold and its subsidiaries on the Asankrangwa gold belt in Ghana, including all the concessions and mining leases that make up Obotan.
PMI Gold has previously announced that the Obotan project has a post-tax net present value of US$387 million, assuming a US$1,300 per ounce gold price, and a 5 per cent discount rate. It also has a projected post-tax internal rate of return (NYSE:IRR) of 28 per cent, and a capital payback period of just less than 3 years.
Start of construction is targeted for this quarter, for first gold production beginning in 2014, conditional on approvals and financing arrangements.
Average production is slated for 221,500 ounces of gold per year for the first five years, with total production estimated at 2.26 million recovered gold ounces over the 11.5 year mine life.
Asante also noted Thursday that the private placement financing of up to $2 million announced last November will not be undertaken at this time, as it anticipates that enough working capital will be available from the exercise of outstanding warrants that are now priced "near market".
The gold junior is also currently exploring the Fahiakoba Concession located in the centre of Ghana's Golden Triangle betweenPerseus Mining's (TSE:PRU) (ASX:PRU) 280,000 ounce-per-year Edikan gold mine, and AngloGold Ashanti's (NYSE:AU) 315,000 ounce-per-year Obuasi gold mine.
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