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- Shares in NuEnergy Gas (NGY) saw a significant jump yesterday after the energy company completed the sale of its Fosterville Gold Royalty
- The sale to Vancouver-based Metalla Royalty and Streaming was originally announced in late July
- Under the terms of the deal, NuEnergy received $2 million in cash and 467,730 shares in Metalla, worth roughly $5.2 million
- The proceeds will allow the company to advance the development of its other gas assets in South Sumatra, Indonesia
- NuEnergy Gas closed 33.33 per cent in the green for 1.6 cents per share
Shares in NuEnergy Gas (NGY) saw a significant jump yesterday after the energy company completed the sale of its Fosterville Gold Royalty.
The 2.5 per cent royalty had been part of NuEnergy’s portfolio for 28 years, and relates to the north and south extensions of the successful Fosterville gold mine in Victoria, owned by Toronto-based Kirkland Lake Gold.
Metalla Royalty and Streaming, another Canadian company based out of Vancouver, has now acquired the royalty in exchange for $2 million in cash and 467,730 shares, worth roughly $5.2 million.
The deal was originally announced in late July as part of a broader effort to cover outstanding loans from Globaltec – a major shareholder in NuEnergy which had previously provided additional funds to support the development of other assets.
At the time, Alan Fraser, a Director of NuEnergy Gas, believes the sale will only enhance the company’s outlook and assist in progressing its Indonesian gas activities.
“The improvement in the Fosterville mine grade, the rise in the gold price along with the desire to unlock the true value of the royalty reflected in the company’s balance sheet, and coupled with the need for working capital, provided the impetus for this sale,” he said.
“NuEnergy’s focus is the development of unconventional gas in the highly prospective area of Indonesia in South Sumatra where the company has spent about $70 million,” he added.
With the sale now complete, NuEnergy said the funds will “reinvigorate” its activities.
The company also noted that, as a shareholder of Metalla Royalty and Streaming, it will have exposure to any further increases in gold prices, with access to additional liquidity should NuEnergy choose to sell its holding.
NuEnergy Gas closed 33.33 per cent in the green for 1.6 cents per share.
