Capstone Mining Corp. has entered into a definitive share purchase agreement to sell its Kutcho development project to Desert Star Resources Ltd. Under the terms of the agreement, Capstone will receive C$28.8 million in cash, common shares of Desert Star representing 9.9% of the issued and outstanding shares upon completion of the transaction, and will have the right to nominate one representative to the Desert Star board of directors under certain circumstances.
“The divestiture of Kutcho is consistent with our strategy to focus on our core assets,” said Darren Pylot, president and CEO of Capstone. “This agreement allows us to retain exposure to the Kutcho project, while strengthening our balance sheet. We look forward to seeing the Kutcho project advance under Desert Star’s ownership.”
The transaction is subject to financing and other customary closing conditions and is expected to close in the third quarter of 2017. Capstone intends to use net proceeds from the sale primarily to reduce outstanding borrowings under its revolving credit facility.
Capstone Mining Corp. is a Canadian base metals mining company with three producing mines: the Pinto Valley copper mine in Arizona, the Cozamin polymetallic mine in Zacatecas state, Mexico, and the Minto copper mine in Yukon, Canada.
