Milner Consolidated Silver Mines (ASE) has entered an option agreement to sell its 25.5% interest in Minerales de Copan S.A. de C.V. to Fischer-Watt Gold (NASDAQ).
The price is $1.4 million, to be paid over five years. The main asset of Minerales de Copan is a Honduran gold mine.
Fischer-Watt must spend $US6 million on exploration and development, and on installation of production facilities at the mine.
Gold has been produced there for the past 10 years but at an insufficient profit. Currently, Milner has very substantial liabilities.
It entered the agreement because, in addition to the company’s limited reserves and substantial liabilities, a promising area near the open pit will require an expensive exploration program.
The agreement calls for Milner to receive a sliding-scale production royalty payment from gold and silver production based on the price of gold. This will vary from 0.7% (when the price of gold is $US500 or less) to a maximum of 1.8% (if the price reaches $US1,000).
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