Austral Gold Sells Additional Unico Shares to Related Parties
AUSTRAL GOLD LIMITED (AGD) Share Update July 2024 Thursday 25th
Austral Gold Announces Sale of Additional Unico Shares to Related Parties
Austral Gold Limited (ASX: AGD; TSX-V: AGLD; OTCQB: AGLDF) has announced an agreement to sell 8,139,023 shares of Unico Silver Limited to its largest shareholder, Inversiones Financieras del Sur SA Sociedad Anonima (IFISA), in a transaction valued at approximately A$1.5 million.
Instant Summary:
- Austral Gold to sell 8,139,023 Unico shares to IFISA.
- Transaction valued at approximately A$1.5 million.
- Sale price determined by the greater of the five-day VWAP or the closing price before the closing date.
- Transaction is a related party transaction but exempt from formal valuation and minority approval requirements.
- Proceeds to be used as general working capital.
Transaction Details
Austral Gold Limited has entered into a share purchase agreement with its largest shareholder, IFISA, to sell 8,139,023 common shares of Unico Silver Limited. The sale price will be the greater of A$0.1863 per share, which is the five-day volume weighted average price (VWAP) for Unico Shares on the ASX, or the closing price on the trading day immediately prior to the closing date.
Regulatory Considerations
As IFISA is Austral Gold's largest shareholder, this transaction is classified as a 'related party transaction' under Multilateral Instrument 61-101 and TSX Venture Exchange Policy 5.9. However, it is exempt from formal valuation and minority approval requirements because the fair market value of the shares being sold is less than 25% of the company's market capitalization. The transaction is also exempt from ASX shareholder approval requirements as it does not constitute the sale of a substantial asset under ASX Listing Rule 10.1.
Board Approval and Use of Proceeds
The agreement has been approved by the Board of Directors of Austral Gold Canada Limited and the independent directors of Austral Gold. Two board members who are also shareholders of IFISA abstained from the vote. The independent directors believe the terms of the agreement are fair and reasonable. The net proceeds of approximately A$1,516,300 will be used as general working capital for the company's operations.
About Austral Gold
Austral Gold is a growing gold and silver mining producer with a focus on building a portfolio of quality assets in the Americas. The company operates based on three strategic pillars: production, exploration, and equity investments. Austral Gold continues to advance its portfolio of producing and exploration assets as part of its growth strategy.
This transaction is likely to have a neutral to slightly positive impact on Austral Gold's stock price. The sale of Unico shares provides additional working capital, which can be used to support ongoing operations and growth initiatives. However, as it is a related party transaction, it may raise some concerns among investors regarding governance and transparency.
Investor Reaction:
Investor reactions have been mixed. Some investors appreciate the additional working capital, while others are cautious about the related party nature of the transaction. Analysts note that the sale price being determined by market conditions helps mitigate concerns about fairness.
Conclusion:
Investors should monitor Austral Gold's use of the proceeds from this transaction and assess the company's ongoing performance. Transparency and effective use of capital will be key to maintaining investor confidence. Stay tuned for further updates on Austral Gold's strategic initiatives and market performance.