21/09/2015 - 09:53

Northern to buy stake in Chinese explorer

21/09/2015 - 09:53

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One week after a big spike in its share price, Northern Mining has finalised plans to buy a major stake in a China-based gold exploration firm for a cash and share package worth $7.25 million.

Northern to buy stake in Chinese explorer

One week after a big spike in its share price, Northern Mining has finalised plans to buy a major stake in a China-based gold exploration firm for a cash and share package worth $7.25 million.

Under the terms of the agreement, Northern will own 49 per cent of Northland Resources in exchange for $2.5 million in cash and 158.3 million Northern shares valued at 3 cents each.

Investors haven’t responded well to the deal, however, with Northern shares falling 14.2 per cent to 2.4 cents each at 10am.

This follows a recent surge in the company’s stock.

Last Monday, Northern shares more than doubled in value, rising from 1.3 cents to 2.9 cents.

It prompted the ASX to lodge a price query with Northern, to which the company replied that it was not aware of any reason for the change in price and volume.

The deal is with Wan Yew Cheong, who holds Northland’s entire issued share capital.

On completion of the agreement, Northern chairman Tony Ong will become a director of Northland.

Northland owns a gold concession in China.

“Northland is in the business of gold mining operations in Xinjiang Uygur and Inner Mongolia in China and intends to seek business investments and joint venture opportunities in gold and nickel mining projects,” Northern said in a statement.

“Oulinda Group, a subsidiary of Northland, has spent the past two years and more than $US12 million to secure the gold concession.

“Oulinda is expected to secure financing support from its parent company so as to complete its final geological study before further submissions are made to the Xinjiang Geology and Mineral Resources Bureau in China.”

Northern recently finalised the sale of its Georges Reward’s tenement to Metals X for $4.5 million, and says it now has $9 million cash in the bank.

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