Inca Minerals Limited (ASX: ICG), a junior resource company from the metals and mining industries shares an update to the market regarding its Earn-in Agreement with South32 for its Greater Riqueza Project (Riqueza).
Initially, the company entered into the Earn-in Agreement with South32 on 22 August 2018, and at present both the parties are negotiating on this agreement. Under this agreement, South32 will be acquiring 60% interest in Riqueza Project by the end of the first phase of earn-in acquisition. The consideration for this acquisition will be in the range of US$8 million – US$10 million.
As per the revised agreement, subject to other terms and condition mentioned in the Earn-in Agreement, South32 will be providing ICG, the initial funding of US$9 million for four years. Post the completion of these four years, South32 will be acquiring 60% interest in the Riqueza Project.
The planning related to exploration, its due diligence and a detailed negotiation is currently in progress. As agreed by both the parties, the negotiation period is now extended till 15 March 2019.
However, the current negotiation will depend on the fulfillment of its initial agreement’s outstanding terms and conditions. The ongoing negotiation will also depend on the extent of satisfaction level of South32 based on the results of all technical, commercial and legal due diligence.
The official listing date of ICG on ASX is 19 June 2008, where the performance of the company remains consistently negative till last one year. However, YTD performance is 33.33%.
As per the annual report of ICG for FY2018, which ended on 30 June 2018, the company made a loss of $1,272,175. The balance sheet of ICG reflects that the company has a net asset base of $5,761,426 and a PE ratio of 0.115. It indicates that the company is financially secure to meet long-term obligations. The lower debt-equity ratio of ICG shows that the company used its resources during the period for any financial requirements. ICG has a total current asset of $913,846 and a total current liabilities of $666,107 which shows that the company can even manage its working capital requirements and the short-term debts. However, there was a slight upward movement in the accumulated losses during FY2018 as a result of increased exploration and evaluation expenditure and expenditure on plant and equipment. The total shareholders’ equity is worth $5,761,426.
By the end of FY2018, there was a decrease in the net cash and cash equivalent as a result of increased cash flow through the investing activities of the companies. By the end of the accounting period, ICG has net cash and cash equivalent of $789,315.
By the end of the trading on 17 January 2019, the share of ICG traded flat on ASX. The share price of ICG remains unaffected by its recent update on the earn-in agreement as it might be possible that investors are waiting for further updates on the deal from South32 as well. The closing price of the ICG's share on 17 January 2019 was A$0.004 which is towards 52-weeks low price with the stock holding a market capitalization of A$11.92 million.
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