Avocet Mining has signed an agreement to divest all its assets in Burkina Faso to Ghana-based Balaji Group of companies.
The transaction has an aggregate amount of $5m and comprises the Inata gold mine and certain receivables of Avocet. Of the total amount, $2.5m has to be paid in cash at completion, while the remainder will be issued by deferred payments over a period of seven years.
The proposed assets sale is part of a greater restructuring process and fallout of continuing disagreement among the creditors of the company.
In a statement, Avocet said: “The protracted restructuring process caused by continuing disagreement among the creditors, the deteriorating security situation at the Inata mine, increasing control issues and the exhaustion of all sources of funding has left the company with two options: either to accept the proposal from the Balaji Group for the sale or for SMB and Goldbelt to be placed into liquidation.”
The acquisition of the Inata mine is expected to offer cost synergies to the Balaji Group and comes after its recent purchase of the Kalsaka goldmine in Burkina Faso.
Once restructuring of the Burkina assets is complete after the sale is closed, the Balaji Group intends to invest around $26m to resume full production at the Inata gold mine and develop the Souma deposit.
Earlier this year, production at the Inata mine was hindered by overdue payments to Avocet’s creditor.
The company is involved in negotiations with its creditor Manchester Securities regarding the restructuring of its overdue debt totalling $28.7m.
The transaction is slated for completion on 11 January 2018 subject to certain closing conditions.