Power Metal Resources PLC (AIM:POW) has agreed to sell its 49.9% stake in New Ballarat Gold Corporation (NBGC) to partner Red Rock Resources in a deal worth up to £1.5 million.
The company told investors it has signed a heads of terms agreement for the conditional disposal of NBGC, which holds exploration interests in the Victoria Goldfields, Australia, and in South Australia.
Power Metal will £250,000 followed by £250,000 after two months, and a further £250,000 after nine months. Subsequent payments are contingent and tied to project milestones.
"The transaction enables the ownership of NBGC to be focused in one entity which is the optimal holding structure for its continuing development,” Power Metal chief executive Sean Wade said in a statement.
“It is also part of a streamlining process of the Power Metal portfolio converting the NBGC interest into a balance sheet investment holding and additional incoming cash.
"The Transaction is the fourth undertaken by Power Metal in various structures over the last two years and which have together significantly built the underlying working capital of the company and its overall balance sheet strength.”
Wade added: “This disposal will further enable Power Metal to concentrate its managerial, operational and financial resources on retained high value business interests and new opportunities."
Power Metal will retain a 0.75% gross production royalty over the exploration interests, and it retains rights regarding the potential purchase of any exploration licenses that may be surrendered or where expenditure commitments are not met.