Moydow selling stake in Ntotoroso gold, silver project

TORONTO (CP) - Moydow Mines International Inc. plans to sell its stake in the Ntotoroso gold and silver project in Ghana to industry giant Newmont Mining Corp. in a deal worth $40 million, the company said Monday.

Moydow Mines said it would receive 800,000 Newmont common shares as partial payment for the project.

Newmont also will deliver 1.3 million Moydow common shares that it holds - just under five per cent of the total - and pay a royalty of two per cent on all recovered ounces of gold and silver produced from Ntotoroso after the first 1.2 million gold equivalent ounces.

At current share prices, the deal is worth about $40 million to Moydow, the company said.

"This transaction represents a substantial premium on our total market capitalization and does not take into account any of our other assets in Africa or Canada," Moydow president and chief executive Brian Kiernan said in a release.

The transaction is subject shareholder and regulator approvals. It's expected to close on or before Oct. 30, following Moydow's annual shareholders meeting.

Moydow also announced Monday that it intends to distribute to its shareholders the proceeds from the disposition of 600,000 Newmont common shares. This would represent a distribution of $1.20 per share, if the share price of Newmont is maintained.

Trading of Moydow stock (TSX:MOY) was halted on the Toronto Stock Exchange.

On Friday, its shares closed at $1.21 - unchanged from the close on Thursday. Newmont shares (TSX:NMC) traded at $51.53 on the Toronto market, down $1.10.