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Golden Queen Mining signs LoI for Soledad Mountain project

Published by , Assistant Editor
Global Mining Review,

Golden Queen Mining Co. Ltd. (Golden Queen) has entered into a non-binding letter of intent (the LOI) with a group of purchasers including Thomas M. Clay and certain members of the Clay family and associated entities (collectively the purchaser) whereby the purchaser would acquire 100% of the company's 50% ownership interest in the Soledad Mountain project. It is anticipated that the company will sell 100% of the shares of its subsidiary Golden Queen Mining Holdings Inc. which owns 50% of the outstanding units of Golden Queen Mining, LLC.

Under the terms of the LOI, the purchase price will consist of (i) extinguishment of all amounts owing to the purchaser by the company (approximately US$26.5 million as of the date hereof); (ii) cancellation of all the purchaser's ownership interest in the company (consisting of 177 701 229 shares, 457 500 options and 18 000 000 warrants); and (iii) cash consideration of US$4.25 million. The company is free to work to find a superior transaction until 1 April 2019.

In addition, if at any time prior to 30 June 2020, the purchaser sells or transfers the purchased interest in the Soledad Mountain project for net proceeds greater than US$55 million (subject to adjustment in certain circumstances), the purchaser agrees to pay the company an amount equal to 20% of such excess proceeds.

A special committee of the independent directors of the company has been negotiating with the purchaser since its proposal dated 4 January 2019 and will be working to settle the terms of a definitive agreement reflecting the transaction.

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