newsForm8-K forGLOBAL GOLD CORP
21-Mar-2011
Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.As of March 17, 2011, Global Gold Corporation (the "Company" or "Global Gold")entered into an agreement with Consolidated Resources USA, LLC, a Delawarecompany ("CR") for a joint venture on the Company's Toukhmanuk and Getikproperties in Armenia (the "Properties"). Upon payment of the initialconsideration ("Initial Consideration") as provided below, Global Gold and CRwill work together for twelve months (the "12 Month Period") to develop theProperties and cause the Properties to be contributed to a new joint venturecompany "Newco", whose identity and terms will be mutually agreed, (the"JVC"). This agreement enables Global Gold to complete its current Toukhmanukproduction expansion to 300,000 tonnes per year and advance exploration inArmenia. Rasia, a Dubai-based principal advisory company, acted as sole advisoron the transaction.
The JVC will (i) own, develop and operate Toukhmanuk and Getik, (ii) be acompany listed on an exchange fully admitted to trading and (iii) have noliabilities, obligations, contingent or not, or commitments except pursuant tothe Shareholders Agreement. Global Gold's ownership in the JVC shall be thegreater value of either 51% or the pro forma value of $40.0 million in newlyissued stock of the JVC at the end of the 12 Month Period. Current Global Golddirector Ian Hague and Chairman Van Krikorian will serve on the JVC board, whichwill reflect the parties' interests. CR and Global Gold will also form atechnical committee to oversee exploration and production matters.
Other key terms include CR paying initial consideration of $5,000,000 as aworking capital commitment ("Initial Consideration") to Global Gold payable by;a $500,000 Advance immediately following the execution of the Agreement (the"Advance"); $1,400,000 payable following the satisfactory completion of duediligence by CR and the execution of definitive documents in 30 days from thedate of this Agreement; and $3,100,000 according to a separate schedule inadvance and payable within 5 business days of the end of every calendar month asneeded. If CR elects not to close the transaction described in this agreementbased on its findings during the 30-day due diligence period, GGC shall havenine months to repay the Advance with 6% interest.
In a proportion to be mutually agreed and payable in 12 months from the date ofthe signing of a definitive agreement (the "12 Month Period"), $40.0 million incash and/or newly issued stock of the JVC and a Net Smelter Royalty, if any, tobe defined in the definitive agreement (the "Remaining Consideration"). Anyunused working capital from the Initial Consideration is to be added to theRemaining Consideration for payment to Global Gold, all as further described inExhibit 10.3 below.
Item 9.01 Exhibits
Exhibit No. Description
10.3 Material Contract - Global Gold Corporation and Consolidated
Resources USA, LLC Joint Venture Agreement dated as of March 17,
2011.