To fund the buy-back, Charters Towers will offer a 1:1 rights issue of 1c options to existing shareholders, which will be convertible to fully paid shares in the company for a further 7c a share within 12 months.
Princeton became a 51% shareholder in Charters Towers when it exercised an option to convert loan funds to equity in November 1998, but was placed in liquidation in August 1999.
Its stake was reduced to 44% when Charters Towers announced a $3 million private placement of shares earlier this year to step up its gold exploration program and fund investment in the technology company Internova MCI.
The conversion of options to shares is expected to raise $10.4 million, which will be used to buy the Princeton shares and repay a loan of $5 million made by Princeton to the company after it became the major shareholder.
Charters Towers will be debt free when the transactions are complete.
The Queensland gold miner has about $40 million in assets, principally the Charters Towers Gold Project. It has expanded its gold resource to 850,000 ounces of gold with expectations of further growth.
