Last Friday, shareholders of Papillon Resources, the company which bought CAG’s Malian properties, approved the acquisition. Papillon was known as Colonial Resources before shareholders approved the name change at the same meeting last week.
CAG now awaits shareholder approval at a general meeting to be held next month before the disposal is completed.
The gold mining company has already started enjoying proceeds from the disposal of the asset as Papillon Resources has already paid US$600 000.
Outstanding payments would be settled in two tranches, of which the first, of US$3,4 million is to be paid on the day that shareholders approve the disposal and the last would be made within the next 24 months.
CAG, in a circular to shareholders last week, said the disposal would make or break the company and if it failed, the company would be insolvent and they would take the liquidation route.
“If the disposal is not successfully completed, the board believes that it is highly likely that the company will become insolvent, and insolvency proceedings, such as administration or liquidation, will be commenced,” said Roy Pitchford, the chief executive and acting chairman of the company. “The primary reason for the disposal is to raise sufficient funds to meet the company’s working capital needs and to enable the company to continue to enhance the value of its assets in Zimbabwe and Botswana.”
CAG has been stuttering for a long time and its problems were worsened by the harsh environment in Zimbabwe especially before the liberalisation of the gold market.
The Malian assets were also in their early stage of development and the company also had difficulties in running it from their head office in South Africa.
“It is the stated strategy of the board to focus on the development of the company’s Zimbabwean assets going forward,” said Pitchford. “The board continues to be actively engaged in the identification of suitable sources of finance or partners with which to develop the Zimbabwe assets in full, to the benefit of all shareholders.”
Should shareholders approve the disposal of the property at the crucial general meeting next month, CAG would now indirectly control 84,7% of the issued share capital of Falgold which is also listed on the Zimbabwe Stock Exchange and 100% of Olympus.
These two, Falgold and Olympus, share a number of gold mines between.