Luna Gold renegotiates Aurizona Goldfields share purchase agreementadmin
Luna Gold Corp. announce that Eldorado Gold Corporation and Brascan Recursos Naturais SA, a wholly owned subsidiary of Brascan Brasil, have agreed to defer for up to one year the payments due on the second anniversary of the closing of its agreement to acquire 100% of the issued shares of Aurizona Goldfields Corporation.
The terms of the Agreement require Luna to make a series of staged payments, some of which are conditional upon the project reaching commercial production, to each of Eldorado and Brascan in exchange for the shares of Aurizona. The second anniversary payments, contractually due on January 31, 2009, consist of US$1.5 million to each of Brascan and Eldorado, and a further US$670,000 due to Brascan in lieu of shares in Luna. These second anniversary payments represent the final pre-production payments.
The Agreement terms have been amended to permit the deferment of the Payments until January 31, 2010; however, any portion of the payments outstanding as of July 31, 2009, shall be increased by 10% of the amount outstanding.
“This Agreement has removed a significant short term financial burden on the Company and we thank Eldorado and Brascan for their support,” stated Jim Bahan, Luna’s CEO. “Although the market is difficult, the Company believes the gold sector will remain buoyant and enters the New Year with great optimism.”
In addition, Mr. Bahan stated that “Since the Piaba Feasibility Study was completed, the Brazilian Real has weakened by approximately 25% compared to the US dollar, resulting in a lower capital requirement to construct the project and significantly lower operating costs which were estimated in US dollars. Another potential benefit is that the project is within a designated Brazil development zone and eligible for fiscal benefits, including federal and state tax reductions and development loan finance.”
He further added “The Company is currently considering conventional equity and loan finance opportunities, as well as reductions of the initial capital investment further by optimizing certain project activities, such as the tailings dam and power line.”