It turns out that in the £9 million fundraiser announced by AIM-listed Vatukoula Gold Mines last week, its former owner, Canadian mining and leisure tycoon Wally Berukoff, made an overnight profit of £860,000 by exercising an option to buy back 200 million shares. When Canadian Zinc Corporation agreed to buy his 18% stake in Vatukoula earlier this year, Berukoff inserted the option to buy 200 million back at 1p each.
He took up the option on Tuesday as the shares closed in London at 1.43p. Canadian Zinc, which wanted to merge with Vatukoula but had to settle for a 17.2% stake instead, has now been forced to top up its own holding by buying 156 million new Vatukoula shares at 1.28p.
In a further blow to Canadian Zinc, it has had to drop its option on Berukoff’s Tuvatu gold mine, also in Fiji. Zinc had held the option since May this year, since when the mine’s value has risen with the soaring gold price. It looked like a great deal for Canadian Zinc, but the sudden draw on its cash has forced the company to drop the purchase, leaving the mine with Berukoff.
City Spy suspects the profits may end up in Cuba, where Berukoff is developing three major leisure resorts in partnership with Fidel Castro’s government.
source: London Evening Standard