Aiming to shore up its balance sheet by repaying a senior revolving credit facility and build shareholder value, GoGold Resources Inc. (TSX:GGD) returned to work following the Labour Day holiday with the news that it inked a deal to sell its interest in the Santa Gertrudis gold project in Sonora, Mexico to Agnico Eagle Mines Ltd. (TSX:AEM)(NYSE:AEM) for US$80 million in cash.
In addition to paying down the credit facility, GoGold plans to use the cash from the transaction, which is expected to be completed during the fourth quarter, for payables and general working capital.
Per the deal, GoGold will also retain a 2% net smelter royalty on the Santa Gertrudis property. If it chooses, Agnico could buy back half of the NSR for $7.5 million U.S.
With the announcement of the asset sale, Agnico is loaning GoGold $7.5 million U.S. to make a payment on the revolving credit with the Bank of Montreal. Upon the transaction being completed in Q4, Agnico will get its money back, plus interest, by subtracting it from the total cash consideration it owes GoGold.
In a separate new release, Agnico Eagle Mines provided shareholders a comprehensive update on its latest exploration activities at the Amaruq project in Nunavut, the Barsele project in Sweden and the La India Mine and El Barqueno project in Mexico. At all the projects, drilling and other exploration work continues to delineate strong mineralization and resources.
Shares of GoGold are jumping on the sale, running up 15.4% to $0.60 in early afternoon trading. Toronto-listed shares of Agnico Eagle came out ahead, but have slipped slightly into the red, down 0.4% to $63.15.
