11/07/2016 - 13:20

GWR backs out of Excelsior funding deal

11/07/2016 - 13:20

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Local resources company GWR Group has backed out of plans to provide about $1.6 million to Excelsior Gold through a share placement.

GWR backs out of Excelsior funding deal
Excelsior’s Kalgoorlie North gold project.

Local resources company GWR Group has backed out of plans to provide about $1.6 million to Excelsior Gold through a share placement.

GWR told the market today it had already provided $2.25 million in interim financing to the gold explorer, through subscription of convertible notes and a cash loan, but had elected not to proceed with participation in a further capital raising.

“The binding term sheet provided for certain other funding rights and commitments for GWR conditional upon the satisfactory completion of due diligence and the exercise of the placement option,” GWR said in a statement.

“GWR had the right to elect to subscribe for about 27.8 million shares at an issue price of 5.7 cents.

“GWR has now provided formal notice to Excelsior that it will not be electing to exercise the placement option.”

The company said it was unable to satisfactorily complete due diligence mostly because of “inconsistencies between the block model” which was provided by Excelsior before the term sheet was signed, and mine reconciliation data on the gold explorer’s Kalgoorlie North operations which was released to the market last week.

“GWR remain in discussions in relation to the future funding arrangements of Excelsior and the Kalgoorlie North gold project and the funding provided pursuant to the term sheet to-date,” GWR said.

Excelsior announced late last month $11.35 million in funding arrangements between GWR and one of its existing shareholders, Farrah Property Securities.

If GWR had taken up its full funding options, it would have become a substantial shareholder in Excelsior with a 17.8 per cent stake, and would have had the right to appoint a nominee to Excelsior’s board.

GWR and Excelsior shares were both unchanged at 4 cents and 6.3 cents each, respectively.

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