Friday, November 13, 2009
Avocet Mining sells Merit Mining stake to Infinity Gold for C$7 million
South East Asia and West Africa operating gold miner Avocet Mining PLC (AIM: AVM) has agreed to sell its entire interest in Merit Mining Corporation (TSX-V: MEM) to Infinity Gold Mining for up to C$7 million in cash.
Avocet owns a 58% stake in Merit through its subsidiary Wega Mining along with a convertible debenture in the amount of C$3 million. Under the settlement proposal, the Wega convertible debenture would be settled for 12.6 million new Merit Shares. The purchase price to be paid for the Merit shares is C$1.59 million.
Infinity has agreed to buy all of the Merit shares held by Wega Mining and the convertible debenture if the proposal is not consummated.
Prior to the take up of any shares under the offer, Avocet may be entitled to repurchase the Merit shares sold to Infinity for the original price less C$1 million and in other circumstances Infinity may be entitled to sell those shares back to avocet for the original price less C$500,000.
In the event that a superior proposal to acquire Merit is made by a third party, Avocet will either not have the right to withdraw its shares from the offer of have to pay to Infinity the difference between the offer price and the amount Avocet realises in any superior proposal.
Avocet’s interest in Merit was acquired as a part of the Wega takeover deal earlier this year.
“The Merit investment is non-core to our strategy of becoming a mid-tier gold producer, we are therefore working closely with Infinity to complete this transaction as expeditiously as possible,” said Chief Executive Jonathan Henry.
