Mandalay to Sell Challacollo Silver-Gold Project to Aftermath

Precious Metals
TSX:MND

Mandalay Resources has made arrangements to sell its Challacollo silver-gold project in Chile to Aftermath Silver.

Mandalay Resources (TSX:MND, OTCQB:MNDJF) has entered into a non-binding agreement with Aftermath Silver (TSXV:AAG.H) with the intention to sell Minera Mandalay Challacollo Limitada (MMC), owner of the Challacollo silver-gold project in Chile, for C$11,625,000, Mandalay announced on Wednesday (August 1).

As per the agreement, Aftermath will pay Mandalay C$1 million upon closing the transaction, with an additional C$1.25 million within the 18 months following. The remainder of the funds will be provided in the months after a feasibility study of the Challacollo project is performed, but no later than November 30, 2019.

“We are pleased to announce the proposed sale of the Challacollo project to Aftermath Silver. One of Mandalay’s key strategic objectives for 2018 was to maximize the value of our portfolio through the sale of non-core assets,” stated Dominic Duffy, president and CEO of Mandalay.

The proposed sale of Challacollo will allow us to realize substantial value for the asset, while continuing our focus on streamlining operations at our two producing assets, strengthening our balance sheet, and positioning Mandalay for future growth,” he added.

For its part, Aftermath will assume Mandalay’s existing contingent share and silver delivery payment obligations with respect to the Challacollo project under the terms of a share purchase agreement dated December 19, 2013 among SSR Mining (TSX:SSRM), Silver Standard Ventures, Mandalay and Mandalay Resources (Chile) SPA and other existing royalties.

Additionally, Aftermath and Mandalay plan to enter into an investor rights agreement, which will allow Mandalay the right to participate in future equity offerings by Aftermath in order to maintain its pro rata ownership interest and, for as long as Mandalay owns at least 10 percent of Aftermath’s outstanding shares, to nominate one member of Aftermath’s board of directors.

However, Aftermath will have a right of first refusal to purchase any Aftermath shares that Mandalay proposes to sell for as long as Mandalay owns at least 20 percent of Aftermath’s outstanding shares.

Acquiring the Challacollo project will further expand the company’s presence in Chile, as it recently purchased an 80-percent stake in the Cachinal project in the South American country.

Cachinal is a low-sulphidation epithermal deposit which hosts 18.4 million indicated and 3 million inferred ounces of silver. Aftermath plans to develop a parallel exploration program at both Cachinal and Challacollo immediately after its transaction with Mandalay closes.

As of 3:28 p.m. EST, Mandalay was trading at C$0.18. Meanwhile, Aftermath was trading at C$0.095.

Don’t forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.

The Conversation (0)
×