Shares of Explorator Resources (TSX: V.EXO, Stock Forum) climbed more than 30% to 23.5 cents after the company announced an agreement just before Tuesday’s market close for Sociedad Punta del Cobre S.A. to acquire a 51% interest in its Explorator Chile subsidiary for US$17 million.
Under the terms of the agreement, SPC is required to make a capital contribution of US$10 million to Explorator Chile on or before March 25, and make a further capital contribution of US$7 million to Explorator Chile within 18 months of the execution of a definitive capital contribution agreement.
Additionally, the agreement requires SPC to provide up to $1.5 million in additional funds to carry out a bankable feasibility study with respect to the El Espino project.
"The agreement that was reached with SPC ensures that property payments due in April 2009 will be made and Explorator Chile will complete its earn-in and own 100% of the El Espino property," said Antonio Ortuzar, Jr., chairman of the board of directors of Explorator.
The agreement is subject to certain conditions, including the completion of due diligence within 60 days, the receipt of all required regulatory approvals, and the approval of Explorator’s shareholders.
The company also notes that SPC has agreed to purchase CAD$1.7 million worth of Explorator’s common shares through its participation in a non-brokered private placement of common shares priced at just over 14 cents per common share.
The proceeds of the offering will be used for the exploration and development of the company's properties and for working capital purposes, says Explorator.
On the company’s Bullboard Wednesday, eldorado21 said: “At first glance it looks as great news. First, the company is going to survive, they have cash not only to continue their operations but to buy the rest of the mine (I think Explortor have to buy a part of the lease by April 2009) It should give the share price a nice push since they are paying much more for 51% of the company than the quote price will indicate[sic].”
