LONDON: Gem Resources Plc, a natural resources company listed on the London Stock Exchange, announced on Monday that it has signed a conditional agreement to acquire a gold processing operation in Colombia, marking its entry into the South American country’s mining sector.

The company’s Hong Kong subsidiary, GemR Corporation Limited, entered into a share purchase agreement to acquire 100% of CREC Material Co S.A.S., the owner of the El Yarumo gold processing facility in Buenos Aires, Cauca. The all-share transaction is valued at £750,000, to be settled through the issuance of 150 million new shares at 0.5 pence each. The deal remains subject to regulatory approvals and the resolution of certain legal and corporate conditions and has not yet been completed.

Based on management information provided to Gem Resources, the El Yarumo plant is currently operating, processing gold-bearing material through a flotation circuit and generating revenue. The company said the business is profitable at an operational level, though it noted that this information has not been independently verified and remains subject to further review prior to the deal’s closing.

The acquisition provides the company with an operating facility, infrastructure and workforce. Independent engineering consultants have estimated the plant’s current processing capacity at approximately 2.5 tons per hour for its active line, with the potential to increase to 3.7 tons per hour following the rehabilitation of a second processing line.

The company said it plans modest initial investment, estimated between $150,000 and $250,000, to modernize the plant and improve reliability. It also sees growth opportunities through increasing throughput, securing additional feed sources and potentially developing a doré production circuit to capture more of the gold value chain. Future expansion into doré production is subject to testwork, engineering and permitting, with preliminary capital estimates of $0.5 million to $1.1 million.

“El Yarumo is an operating gold processing business rather than a greenfield project,” said Louis Ching, executive chairman of Gem Resources, in a statement. “Based on management information provided to us, the plant is currently processing gold-bearing material and generating revenue and is operating profitably at an operational level.”

The consideration structure includes shareholder protections, with shares to be released in stages based on verified cash profits, subject to an 18-month security period. The seller also remains personally liable for certain pre-completion liabilities under the transaction agreements.

Completion is contingent upon the satisfactory resolution of legal and regulatory matters identified in due diligence, including processing permissions, water and discharge permits and contractual rights.