99 Capital Corporation (WDG.V) announced Wednesday that it entered into an agreement to acquire a 66.5% interest in six historically past-producing gold mines located in the Giyani Greenstone belt of South Africa. The company expects the transaction to close on or about October 29, 2010.
As consideration for the acquisition of the interest in the Giyani Gold Project, 99 Capital Corp would pay a total of US$5,000,000 and would issue to the seller 6,000,000 common shares of the company from treasury.
The transaction is structured as a purchase of 100% of the issued and outstanding common shares of Kytanite Development Corp. from Salina Management Holdings Corp.
Prior to the transaction, Rock Island Trading 17 (Proprietary) Limited will be the registered owner of the licences at the Giyani Gold Project. Kytanite owns 70% of the issued and outstanding common shares of Lexshell 837 Investments (Proprietary) Limited which owns 95% of the issued and outstanding common shares of Rock Island Trading.
Following the transaction, 99 Capital Corp's ownership position would be 66.5% of the Giyani Gold Project. The remaining interest is controlled by local South African partners including the property vendor and current owners of surface rights.
In connection with the transaction, 99 Capital Corp said it would proceed with a non-brokered private placement of gross proceeds of up to CAD$9 million. Of the offering, CAD$8 million of units wold be priced at CAD$0.60 per unit, each unit consisting of one common share and one-half of one common share purchase warrant. A whole warrant would be exercisable at a price of CAD$0.85 per share for a period of two years from the date of issuance.
The transaction is subject to certain conditions, including satisfactory completion of due diligence by the company, completion of an NI 43-101 compliant report, and various third-party, regulatory, and governmental approvals including TSX Venture Exchange approval.
99 Capital Corp said the properties include the Klein Letaba, Frankie, Horseshoe 1 & 2, Birthday, and Louis Moore and are located in an area which has historically contained high grade, near surface, multi-million ounce deposits.
WDG.V last traded on the TSX Venture Exchange at C$0.75.
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