2023-06-09 15:33:49 ET
Orea Mining ( OTCQB:OREAF ) -72.2% in Friday's trading after saying it has significant concerns about its solvency due to extensive delays in gaining approval for its planned acquisition of the outstanding stake in a French gold project from the Canadian government department responsible for matters related to sanctions.
Orea ( OTCQB:OREAF ) said it had expected to close its proposed acquisition of an additional 55% stake in the Montagne d'Or gold project holding company in French Guiana in February, but it was delayed by sanctions imposed by the Canadian government on Nord Gold's Russian controlling shareholders.
Orea ( OTCQB:OREAF ) said its sanctions application to the Canadian government made in early March was rejected, and it has proposed amending the terms of the deal with Nord Gold so that a C$100M payment would be made only if and when all sanctions are lifted against Nord Gold and its controlling shareholders in the U.S., the U.K., the European Union and Canada.
The current agreement with Nord Gold requires the C$100 million payment to be made to a frozen account if sanctions are still in effect when and if the conditions to make the payment are triggered.
Orea ( OTCQB:OREAF ) said the Canadian government's rejection was received a few days before the expiration of a French government sanctions authorization, and that no extension by France is possible under current European Union legislation.
Given the timing of the rejection by the Canadian government, the company said there can be no assurance that the acquisition will close.
More on Orea Mining:
- Financial and valuation comparison to sector peers
- Analysis: Orea to buy Nordgold's stake in Montagne d'Or JV company
- Stock price return: Down 75% YTD, down 59.5% in the past 12 months.
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Orea Mining plunges after delays in mine approval prompt solvency concerns