Aurumin Ltd (ASX:AUN) will divest its Mt Palmer Gold Project in Western Australia to Kula Gold Ltd (ASX:KGD), marking the last of its planned divestments in the Southern Cross region as the company focuses on its Sandstone Gold Operations.
“Subject to successful completions, Aurumin will be positioned with a 20% interest in the Mt Palmer JV, a royalty on the Mt Dimer mining tenements for gold and silver with Beacon Minerals and the potential future royalty on the Mt Dimer exploration tenements with MinRes,” said Aurumin managing director Brad Valiukas.
“There still remains significant potential at Mt Palmer and we look forward to our continuing participation as Kula gives the project the attention it deserves.
"Aurumin’s focus is now firmly on Sandstone and generating the critical mass required for future production.”
The Mt Palmer Project is 40 kilometres southeast of Southern Cross and is home to the Mt Palmer mine that has a history of high-grade production, having produced around 158,000 ounces of gold at 15.9 g/t before ceasing commercial operations in 1944.
The agreement
The parties have entered into a binding term sheet agreement that will see Kula acquire the Mt Palmer Project tenements M77/406, E77/2210, E77/2423, E77/2668.
Under the agreement, Aurumin will receive $250,000 in shares or cash (at Kula’s option) for Kula to acquire a 51% interest in the tenements and mining information.
By spending a further $1,000,000 Kula can earn a further 29% interest over three years. After this, spending will be pro rata or Aurumin will dilute. Aurumin’s equity position will convert to a 1% gross royalty if it dilutes to less than 10%.
If Kula does not proceed with the Stage 2 earn-in or does not satisfy its condition within the three-year period, Aurumin will be able to purchase back a 2% joint venture share in the tenements for $1.00.