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Empire Resources (ASX:ERL) investment in Dacian Gold (ASX:DCN) generates 175% return

Highlights

  • Empire Resources announced the sale of the remaining 4 million shares of Dacian Gold for AU$839,000.
  • In 2019, Empire had invested AU$1.5 million in NTM Gold, which later merged with Dacian gold.
  • Over the year, the investment value increased significantly to AU$4,349,591 to generate a 175% return for Empire.
  • As of 19 October 2021, Empire holds a strong cash position with no debt.

Empire Resources Limited (ASX:ERL) announced the sale of the remaining 4 million shares of Dacian Gold Limited (ASX:DCN) netting AU$839,000. The Dacian share sale was undertaken in multiple tranches with net proceeds of AU$4,349,591 generating a 175% return on the investment. Empire records a net profit of AU$2.629 million on its AU$1.5 million investment.

Must Read: Empire Resources’ (ASX:ERL) investment in Dacian Gold (ASX:DCN) delivers substantial returns

NTM Investment and Dacian Merger

In July 2019, Empire had participated in an equity placement to invest a sum of AU$1.5 million in NTM Gold Limited (ASX:NTM), a gold explorer with projects in the Eastern Goldfields of Western Australia, at AU$0.0325 a share for 46.15 million fully paid ordinary shares. As a result of the investment, ERL held 8.70% of NTM’s expanded capital. Empire had borrowed the AU$1.5 million investment capital from its Non-Executive Chairman and major shareholder, Michael Ruane.

Suggested Read: Empire Resources (ASX:ERL) shares rise on the back of excellent Yuinmery drilling results

During 2020, the shares of NTM continued to outperform the industry indices amidst the strong gold price environment. In November 2020, NTM and gold mining company Dacian Gold Limited (ASX:DCN) announced their merger with NTM shareholders receiving 1 Dacian share for every 2.7 NTM shares held. As on the announcement day of the merger plans on 16 November 2020, the merger agreement valued NTM shares at AU$0.1296 a share, equivalent to the Dacian’s closing share price of AU$0.35 a unit divided by 2.7.

Read Here: Empire Resources (ASX:ERL) reports key developments across investment portfolio during FY21

Dacian Share Sales Since Merger and proceeds

Dacian Share Sales Since Merger Completion Source: Empire Resources Company Announcement 20 October 2021

The merger of the gold players concluded in March 2021 with Empire holding 16,995,818 Dacian shares after the share settlement. Since the completion of the merger of NTM and Dacian, Empire has sold its entire shareholding in merged entity for a total net proceeds of AU$4,349,591. As previously announced by Empire, the company has already settled its loan of AU$1.5 million with outstanding interest. 

As on 19 October 2021, Empire holds a cash position of AU$2 million (at hand, unaudited) with no debt. The strong cash position allows Empire to aggressively ramp up its exploration plans, while also achieving its corporate objectives.

Read Here: Empire Resources (ASX:ERL) paves the way forward after a busy September quarter

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