ECR Minerals (LON:ECR) Minerals Indonesian associate sells its stake in Derewo River gold project

Friday, February 04, 2011 by Jamie Ashcroft

ECR Minerals (LON:ECR,OTC:MTGDY) associate Paniai Gold has agreed share-based deal to sell its 50 percent stake in the Derewo River gold project to West Wits Mining (ASX:WWI).

ECR currently has a 16 percent stake in Paniai and it could increase it holdings further by converting an outstanding debt. Paniai owes the company A$350,000.

Initially West Wits will issue 80 million shares, worth A$4 million, to Paniai.

It will also issue 46 million performance shares and 12.5 million options (exercisable at A$0.08 for 5 years).

The performance shares - worth A$2.3 based on West Wits’s current price - will convert into new ordinary shares if Derewo River produces 20,000 ounces of gold within 2 years.

The deal will make Paniai’s largest shareholder, with around 28 percent.

The Indonesian company intends to retain its interest in West Wits for the foreseeable future. Meanwhile it plans to identify and evaluate new projects in South East Asia.

“ECR has been actively involved in the management of Paniai to date, including the structuring of the proposed transaction with West Wits, and will remain so going forward,” the company said.

West Wits intends to fund the development of Derewo River with A$300,000 being made available immediately. The ASX-listed firm will also raise around A$3.5 million by issuing new equity.

http://www.proactiveinvestors.co.uk/companies/news/25246/ecr-minerals-indonesian-associate-sells-its-stake-in-derewo-river-gold-project-25246.html

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