SMA exits Guinea assets, eyes new venture

JOHANNESBURG (miningweekly.com) – Aim-listed Sovereign Mines of Africa (SMA) is exiting its 75% interest in the Mandiana gold project, in Guinea, following a strategic review of the company’s assets.

While the transaction will leave SMA as an Aim Rule 15 cash shell, with six months to make an acquisition constituting a reverse takeover or risk a trading suspension, the company assured shareholders it had entered into an exclusivity agreement to acquire new undisclosed assets in the mining industry.

“The company is in a transitional period while we execute our new vision following a detailed strategic review which includes a potential acquisition within the mining industry,” SMA chairperson Giles Clarke said in a statement on Monday.

A detailed due diligence is under way, with the company to make further announcements in due course.

“The board has been conducting a strategic review of the company’s assets and activities over the preceding ten months, which has included the decision to not continue to fund the development of its Guinean assets,” he explained.

The Guinean assets, after a writedown during the year ended December 2015, are held as a zero value in SMA’s books, which also recorded losses of £162 317 in the same year.

SMA entered an agreement with TSX-V-listed Volcanic Metals to farm out its assets, with SMA receiving 9.9% of the outstanding share capital of Volcanic.

“This is an important step for the company and realises immediate value for shareholders, while retaining an interest in the future of the Mandiana gold project,” Clarke said.

“The farm-out of the Mandiana gold project forms part of an overarching strategy to enhance shareholder value. It is the company’s intention to hold its interest in Volcanic Metals for such time that maximises shareholder value,” he added.

The transaction remains subject to a number of conditions.