Northwest Backs Out of Firstgold Purchase

23 December 2009 (Last Updated December 23rd, 2009 18:30)

China-based Northwest Non Ferrous International Investment said it will withdraw from a $26.5m deal to acquire 51% stake in gold junior Firstgold, following US protests against the deal following national security concerns. In July Firstgold signed an agreement with Northwest Non Fe

China-based Northwest Non Ferrous International Investment said it will withdraw from a $26.5m deal to acquire 51% stake in gold junior Firstgold, following US protests against the deal following national security concerns.

In July Firstgold signed an agreement with Northwest Non Ferrous to sell its controlling stake and senior secured debt from its lenders.

Since then the Committee on Foreign Investment in the US (CFIUS) has advised Firstgold to recommend that US President Barrack Obama reject the deal.

During investigations CFIUS found that critical national security issues existed, especially with the location of Firstgold's properties near the Fallon Naval Air Station, 60 miles from company's Relief Canyon project.

The station is used by the navy for tactical aviation training.

Firstgold is considering its alternatives and said it will now need to find out if the withdrawal by Northwest will impact the agreement to acquire its senior secured promissory notes.

Firstgold has had preliminary negotiations with other parties that either acquire or invest in the company due to the uncertainty surrounding the Northwest agreement.

Firstgold CEO Terry Lynch said the company did not know Northwest's intentions and is hopeful that it can find a way to close the deal.

"In the interim Firstgold is reviewing other options to bring Relief Canyon into production and to obtain value for its assets," Lynch said.