Alio Gold has entered into an agreement to sell non-core assets, located 40km south of the company’s Florida Canyon Mine in Nevada to Coeur Rochester, a subsidiary of Coeur Mining.
The assets include those comprising the Lincoln Hill Project, Wilco Project, Gold Ridge Property and other nearby claims. Under the terms of the definitive agreement, the Company will receive total consideration of $19 million upon closing of the transaction, payable in shares of Coeur common stock (the Consideration Shares) valued based on a volume-weighted average stock price for the five (5) trading day period ending on the third trading day preceding the closing.
Recently, the Company has also substantially reduced its outstanding debt with Macquarie Bank Limited (MBL) from $15 million at June 30, 2018 to $5 million as at today’s date. The debt was reduced by making a scheduled quarterly payment of $1.25 million on September 30, 2018; by monetizing the gold hedge book for proceeds of $2.5 million; and by utilizing approximately $6.25 million in previously restricted cash to pay down the debt. The Company expects to fully extinguish the MBL debt during the fourth quarter.
In addition, the Company has also settled a $5 million contingent liability1 that the Company acquired with its acquisition of Rye Patch Gold Corp. (Rye Patch) and the Florida Canyon Mine earlier this year. The Company has also updated its surety bond for the Florida Canyon Mine in Nevada, releasing an additional $5.1 million in cash.
“These transactions are consistent with our strategy to focus on optimizing our operating mines to generate cash flow,” said Greg McCunn, Chief Executive Officer. “As a result of the reduction in debt and increasing our working capital we are well positioned to ramp up Florida Canyon and to continue with the pit pushback that is underway at our San Francisco Mine. We are pleased to strengthen the balance sheet while retaining future growth opportunities at Florida Canyon which include pit rim resource expansion potential, restart of the adjacent Standard Mine and further delineating the known sulphide deposit below the current oxide resource.”
The Transaction is subject to customary closing conditions and is expected to close in the fourth quarter of 2018. Transfer of the Wilco Project to Coeur is subject to a 30-day right of first refusal in favor of a third party. The Transaction is expected to close after either expiry or exercise of the rights. Coeur has granted customary registration rights to Alio Gold to facilitate resales of the Consideration Shares by Alio from time to time.
Source: Company Press Release