Horizon Minerals Ltd (ASX:HRZ) continues its strategy of divesting non-core assets on entering a binding option and sale deed with Dundas Minerals Ltd (ASX:DUN) covering an interest in 19 tenements within the company’s Baden Powell and Windanya project areas.
The option relates to all mineral rights over 16 Prospecting Licences, two Mining Leases and one Mining Lease Application covering 3,230 hectares about 45 kilometres north of Kalgoorlie in WA’s Goldfields.
Horizon’s divestment strategy enables it to concentrate on building, exploring and developing its suite of gold assets within proximity to Kalgoorlie.
“Fits this strategy”
The company’s chief executive officer Grant Haywood said: “We are continuing to review our suite of assets including optimisation and rationalisation of our large tenement portfolio, both through acquisition and divestment opportunities.
"This option agreement with Dundas fits this strategy via monetising non-core assets to a very capable team to take the project forward. It will reduce our holding costs and bring additional cash and investments into the business, whilst still retaining an interest in the projects for any potential upside.”
Consideration
The option will see Dundas pay Horizon a $500,000 non-refundable option fee which consists of:
- $375,000 within five days of signing the option, comprising $125,000 in cash and $250,000 in DUN shares, with the number of shares determined by the 5-day VWAP prior to execution; and
- $125,000 in cash payable on the first 12-month anniversary of the execution date.
Option conditions
Dundas must incur at least $500,000 of on-ground exploration expenditure on the tenements before exercising the option, which has a term of 24 months.
The buyer may withdraw from the option with 30 days’ notice or allow the option to lapse, only after incurring a minimum of $500,000 of exploration expenditure and paying the option fee, with all tenure remaining 100% owned by Horizon in those circumstances.
If Dundas moves to exercise the option, Horizon will:
- Sell 85% of its interests in the tenements to Dundas for $1 million completion consideration, with this consideration to be settled in cash, shares or any combination of both at Dundas’ election;
- Retain a 15% interest free-carried to a decision to mine at which time a joint venture will be formed with Dundas; and
- Have priority ore processing rights from the tenements to process ore through secure processing arrangements that are on equal or better terms than other processing alternatives of the JV.
The agreement provides for Dundas to have a licence to explore for minerals on the tenements during the option period and it must meet annual expenditure commitments and keep the tenements in good standing.
Finally, all Dundas option fee shares and completion consideration shares issued shall be subject to voluntary escrow of six months.