The renegotiation of a purchase option on the Ridgeway mine in South Carolina prompted Kennecott to increase its interest in the operation to 100% from 52% by exercising a right of first refusal.
Galactic Resources (TSE) had previously reached an agreement to sell its 48% interest to Placer Dome (TSE). Placer agreed to purchase the interest for US$18 million in cash plus the assumption of about US$21 million in debt relating to Galactic’s interest in the mine.
Following a due diligence review by Placer, the deal was renegotiated, resulting in the cash portion of the purchase price being lowered to US$16 million.
But Kennecott, which holds a right of first refusal on Galactic’s interest, opted to exercise its right and acquire the 48% interest under the same terms as the final Galactic-Placer agreement. The agreement is expected to close on or about Jan. 20.
Galactic expects to record a loss of US$10 million for 1991.
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