Golden Queen Enters JV to Develop and Operate Soledad Mountain Project

Golden Queen Mining Co. Ltd. (TSX:GQM; OTCQX:GQMNF) has entered into an agreement with entities controlled by Leucadia National Corporation (NYSE:LUK) which collectively owns approximately 27% of the issued and outstanding shares of Golden Queen, to invest US$110 million in cash in exchange for a 50% joint venture interest in the Soledad Mountain Project subject to approval by Golden Queen’s shareholders and certain other conditions. Soledad is a fully permitted, open pit, heap leavh gold and silver project located outside the town of Mojave in California.

According to the press release:

Transaction Benefits

Management of Golden Queen believes that the transaction will have the following benefits for the Company and its shareholders:

• Involvement of Leucadia National Corporation, a well-respected and credible long-term partner with a strong balance sheet and a history of successful investments in the mining sector;
• Support by members of the Clay group, long-term shareholders who have supported Golden Queen for over 20 years;
• US$110 million cash contributed to the joint venture on closing;
• Commitment from Leucadia and the Clay group to fund up to an additional US$40 million in the aggregate to the joint venture, which will be used to fund the Project; and
• Low-risk, equity-based capital structure with no hedging and no financial covenants.

Lutz Klingmann, President of Golden Queen commented:

We believe that this transaction allows the Soledad Mountain Project to enter full construction after decades of patient effort.  The Company is delighted to enter into a joint venture with Leucadia, whose well-known, disciplined capital allocation procedures fit well with what we hope to achieve at Soledad Mountain.  We believe that a low-risk, equity-based capital structure is the prudent approach to managing the risks of the construction stage.  If and when in production, we look forward to reexamining the capital structure to determine whether or not returns to equity investors can be enhanced through leverage.

Click here to view the full press release.