Item 1.01 Entry into a Material Definitive Agreement.
On August 12, 2016, Gold Resource Corporation (the “Company”) acquired all of the outstanding shares of Walker Lane Minerals Corporation (“WLMC”) pursuant to a Stock Purchase Agreement dated August 12, 2016 (the “Purchase Agreement”) among the Company and TXAU Development, Ltd. and TXAU Investment, Ltd., each a privately held Texas limited partnership (the “Shareholders”). Upon completion of the acquisition, WLMC became an indirect subsidiary of the Company.
At the closing, the Company paid to Shareholders a total purchase price of $13,212,855, consisting of: (i) cash in the amount of $152,855 for reimbursement of certain fees incurred during the transaction and for maintenance of mining claims, and (ii) 2,000,000 shares of the Company’s restricted common stock which were valued at $13.1 million in the aggregate, based on the closing price of the shares on the NYSE MKT as of the closing date. The shares are subject to restrictions on resale in accordance with federal and state securities laws.
The Purchase Agreement contains customary representations, warranties and covenants by the parties. Subject to certain limitations and conditions, the Company will be indemnified by the Shareholders for damages resulting from breaches or inaccuracies of the representations, warranties, and covenants of the Shareholders and WLMC as set forth in the Purchase Agreement. The assets held by WLMC consist of certain mining claims subject to royalty interests and water rights associated with the property located in Mineral County, Nevada. The Purchase Agreement further provides that the Company will retain an agreed-upon consultant familiar with the property, drill a water well at the property location for development purposes, and should the Company determine in the future to abandon any portion of the property held by WLMC at the time of the acquisition, it shall transfer the affected mining claims to the Shareholders. WLMC has no active operations.
The foregoing description of the Purchase Agreement and the transactions contemplated thereby is not complete and is subject and qualified in its entirety by reference to the text of the Purchase Agreement, which is filed as Exhibit 10.1 to this report and incorporated by reference in this Item 1.01. The representations and warranties of the parties in the Purchase Agreement have been made solely for the benefit of the other parties to the Purchase Agreement, and were not intended to be, and should not be, relied upon by any person other than such parties, including shareholders of the Company; should not be treated as categorical statements of fact, but rather as a way of allocating risk between the parties; in some cases have been qualified by disclosures that were made to the other parties in connection with the negotiation of the Purchase Agreement, which disclosures are not necessarily reflected in the Purchase Agreement; may apply standards of materiality in a way that may differ from standards of materiality applied by investors; and were made only as of the date of the Purchase Agreement or as of such other date or dates as may be specified in the Purchase Agreement, and are subject to developments occurring after those dates.