The plan of Perth-based precious metals explorer Dragon Mining NL to purchase a Ukranian gold project from fellow Perth company Eurogold Ltd in a scrip deal worth $13 million has hit a snag, with the mine being temporarily closed.
The plan of Perth-based precious metals explorer Dragon Mining NL to purchase a Ukranian gold project from fellow Perth company Eurogold Ltd in a scrip deal worth $13 million has hit a snag, with the mine being temporarily closed.
Eurogold is currently appealing a decision by the Ukranian government's Ministry of Environmental Protection to place a "temporary mine closure" order on the Saulyak gold project, the company's largest asset, last year.
However, Dragon has indicated with the failure of the due diligence precedents to be satisfied, the company had lost confidence in the status of the project.
The two companies have therefore decided to extend the completion date from the previously-set end-of-February deadline, and are negotiating to reach an alternative arrangement at a lower price.
Eurogold has also begun discussions with another party concerning the sale of the project.
The full text of a Eurogold announcement is pasted below
On 21 December 2006 Eurogold announced that it had entered into an agreement for the sale of its Saulyak Gold Project in the Ukraine to Dragon Mining NL ("Dragon") subject to certain conditions precedent, including Dragon completing legal and financial due diligence.
On 31 January 2007 Eurogold announced that during the quarter ending 31 December 2006 Saulyak LLC had received a "temporary mine closure" order from the Ministry of Environmental Protection of the Ukraine. Eurogold considers that the reasons for the order
are tenuous and has appealed against the order. Eurogold remains confident that the order will be lifted. In the meantime, Dragon has indicated to Eurogold that it will rely on the order to say that the due diligence condition precedents have not been satisfied. As a
consequence the parties have agreed to extend the completion date and are negotiating to reach an alternative arrangement at a lesser price. These discussions are confidential and incomplete. The terms of the sale agreement and loan agreement have otherwise not changed.
Eurogold has also begun discussions with another party concerning the sale of the Saulyak Project. These discussions are also confidential and incomplete.
Eurogold will continue to keep the market informed and, in particular, will provide details when negotiations are completed.
The full text of a Dragon announcement is pasted below
Following an extensive and thorough due diligence review Dragon has yet to achieve confidence in the status of Saulyak Gold Project following the `temporary mine closure' order issued by the Ministry of Environmental Protection of the Ukraine as announced on 31
January 2007 by Eurogold Limited.
As a consequence the parties have agreed to extend the completion date and are negotiating to reach an alternative arrangement.
Eurogold has also advised entering into discussions with another party, concerning the sale of the Saulyak Gold Project.
Dragon will advise the outcome of negotiations when concluded.
