Renaissance Minerals has negotiated a deferment of a A$10 million (US$9.29 million) payment to OZ Minerals that was part of a deal for OZ’s gold deposit exploratory rights in Mondulkiri province.
Renaissance took ownership of OZ’s exploration licences in May 2012 in a deal that included a payment of $10 million if the reserve at the Okvau gold deposit grew to 1.25 million ounces of gold. In March, Renaissance announced the reserve was near the threshold.
Although Renaissance claims to be “well funded with cash of approximately $5 million”, the deferment would in theory allow it to put the money in the project.
“The gold price has had a bit of a downturn over that period of time [since the project began in May 2012] and also investors’ confidence in gold companies has seen a fairly significant deterioration over that 12 months,” Justin Tremain, Renaissance managing director, said, referring to project challenges.
In exchange for the deferment, OZ, the largest shareholder in Renaissance, will get 15.3 million extra shares. At close yesterday, Renaissance shares fell slightly to A$0.68.
OZ sold rights after years of exploration failed to yield strong results and saw allegations of corruption. In May 2011, OZ was accused of paying $1.1 million to family members of the Ministry of Industry, Mines and Energy.
OZ and local authorities have denied the allegations, but Australian police reportedly re-opened investigations in January.