23/01/2013 - 12:34

Kingsgate takes stake in Caravel

23/01/2013 - 12:34

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Kingsgate takes stake in Caravel

Kingsgate Consolidated is to become the largest shareholder in gold and base metals explorer Caravel Minerals after agreeing to sell a package of exploration tenements for a loss of $15 million.

The two companies have signed a memorandum of understanding for Caravel to acquire Kingsgate’s tenements in Western Australia and Queensland, which the company acquired with the acquisition of Dominion Mining in 2011.

The transaction will result in Kingsgate taking a 36 per cent shareholding in Caravel following the allocation of 135 million of Caravel’s issued shares; worth approximately $5 million based on Caravel’s share price of 3.5 cents at 12:15PM WST.

In addition Kingsgate will be given 20 million unlisted options to acquire Caravel shares exercisable at 10 cents within three years.

The agreement entitles Kingsgate to a seat on the Caravel board, and current employee Tony Poustie will also move to Caravel to take up a senior position.

Kingsgate has announced the transaction will result in the company incurring a write down in the range of $15 million.

Managing director and chief executive Gavin Thomas said the transaction enabled Kingsgate shareholders to still reap any benefits from the exploration tenements, while also enabling the company to focus on other projects.

“These exploration assets have long term potential which can best be evaluated in a focused exploration company,” he said in a statement.

“Importantly our shareholders will continue to benefit from any discoveries or developments made into the future in these areas as Kingsgate will hold 36 per cent of the issued capital of Caravel.”

Kingsgate’s growth strategy is focused on developing projects in Chile and New South Wales as well as exploration in Thailand.

Kingsgate shares have remained steady, trading at around $4.97 each.

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