Karora Resources (TSX: KRR) announced this morning that it has sold its interest in the Dumont Nickel Project to two private funds, for total potential consideration of $48 million, however that figure is significantly lower at closing. Further, the company announced that it will also be conducting a share consolidation within the coming weeks.
With respect to the asset sale, Karora will sell its 28% interest in the project for a total potential figure of $48 million. However, at closing, the company will only receive $10.7 million – of which $3.3 million simply amounts to a refund for restricted cash held by the project, making the initial, and only guaranteed payment only $7.4 million. The $48 million figure stated by the company for the sale of the asset is overly deceiving – the company has the right to receive a portion of future proceeds of any future Dumont sale or monetization event.
In either event, Karora is entitled to receive 15% of the net proceeds of such event, which is net of certain undisclosed costs and deductions – up to a maximum of $40.2 million. The firms stake has been sold to two private funds that upon close will have 100% control of the property.
Additionally, Karora will file articles of amendment to implement a previously approved share consolidation in the near term. The consolidation is to be on a 1 for 4.5 pre-consolidation share basis. A further press release is to be issued by the company over the next two weeks to identify the effective date of the transaction.
Karora Resources last traded at $0.78 on the TSX.
Information for this briefing was found via Sedar and Karora Resources. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.