Companies: GLA    RIO   

Mining investment group Galahad Gold has sold half its holding in Canada's Northern Dynasty Minerals for C$94 million (£41 million).

AIM-quoted Galahad, backed by the entrepreneurial Slater family and RAB Capital, has carried out its declared intention of selling 10.3 per cent of Northern Dynasty, which is working to develop the potentially massive Pebble copper, gold and molybdenum project in Alaska. The buyer at C$10 (435p) a share is QIT-Fer Et Titane Inc, an affiliate of UK mining giant Rio Tinto.

Under a characteristic formula contained in the sale agreement, Galahad stands to receive further payments, if by the end of next year Rio either resells the Northern Dynasty stake at a profit or buys some more at a higher price. In the first case, Rio will pay Galahad half the realised profit and in the second case Rio will pay Galahad an amount equal to the price paid for the further shares minus C$10 a share to a maximum of C$2 a share multiplied by the lesser of the number of shares bought 9.4 million shares – up to a maximum extra payment of C$18.8 million (£8.2 million).

Headed by Canadian broker Ian Watson, Galahad, which holds a significant stake in promising AIM-listed uranium counter UraMin, says it will 'continue to explore options to realise value' from its remaining 10.45 per cent Northern Dynasty holding, while using the latest sale proceeds to repay 'part or all' of a C$20 million debenture issued last September.

Floated at 10p six years ago, Galahad shares have fluctuated over the past three years between 26.5p and 7.75p as investors contemplated the daunting scale of the Pebble project, with varied grades and some technical complexities. Rio Tinto's interest provides some encouragement and the cash and its possible other uses have lifted the shares a modest 0.25p today to 10.5p, valuing Galahad at £78 million, where they have speculative appeal.