06/11/2008 - 12:20

IGC steps up merger talks with Nkwe

06/11/2008 - 12:20

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International Goldfields says it will step up merger discussions with Nkwe Platinum after it received an independent report that valued its South African assets at up to $64 million.

International Goldfields says it will step up merger discussions with Nkwe Platinum after it received an independent report that valued its South African assets at up to $64 million.

The discussions follow an option agreement signed by both companies in August where Nkwe agreed to acquire International Goldfields' (IGC) 15 per cent interest in three South African platinum farms known as the Tubatse project.

Under the six-month option agreement, Nkwe will acquire the interest in Tubatse by way of a scheme of arrangement either by a scrip and or cash deal to acquire all the shares in IGC.

Nkwe already holds an option to acquire a 59 per cent interest in Tubatse and also holds a 74 per cent interest in two farms adjacent to the project.

Today, IGC said the draft report of its assets, delayed due to the heavy falls in the platinum prices over the past month, valued the Tubatse farm at between $44.1 million and $63.57 million, or 35 cents and 51 cents per share.

IGC said Nkwe has also received a separate draft valuation.

"...both parties will now step up merger discussions and hope to complete the proposed transaction as soon as possible after exercise of the option by NKWE," IGC said.

"At this stage NKWE proposes funding the IGC transaction by way of a royalty financing arrangement or a derivative product and is currently in discussions with various parties to this effect.

"Given the likely delay in receiving a final copy of the draft independent valuation both parties have agreed to use the draft as the basis of their further negotiations."

Shares in IGC dropped 4.5 cents to 27.5c while shares in Nkwe shed 0.5c to 18.5c at 14:27 AEDT.

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