Alchemy Resources Limited (ASX:ALY, FRA:45A) has agreed to sell its Karonie and Lake Rebecca gold projects in Western Australia to Forrestania Resources Ltd (ASX:FRS) in a deal valued at $5 million, to be settled in Forrestania shares.
Under the binding heads of agreement, Alchemy will receive 7,725,587 fully paid Forrestania shares, priced using Forrestania’s 10-day volume weighted average price of $0.6472 per share at the date of the agreement.
The company will also retain a 1% net smelter royalty over all minerals mined from the project tenements, although no royalty will apply to the first 110,000 ounces of gold produced from the Parmelia, KZ5 and Taupo deposits.
Alchemy said the sale would crystallise value from the Karonie and Lake Rebecca assets while allowing it to maintain future exposure through the royalty. The company plans to redirect capital and management attention to its Yellow Mountain and Overflow copper-gold projects in New South Wales, as well as other parts of its portfolio.
Chief executive James Wilson said the divestment marked a strategic step in reshaping the company’s asset base and strengthening its financial position.
“The sale of Karonie and Lake Rebecca Projects marks a significant strategic step for the company and highlights our commitment to unlocking value across our asset portfolio. Importantly, the transaction strengthens our financial position and enables the company to redirect capital and management focus towards a number of highly prospective projects that we believe offer substantial growth potential.
Strategic reset
Wilson said management saw Yellow Mountain as a potential flagship exploration asset and intended to target the broader mineralised system across the surrounding regional landholding, which it believes forms part of a larger district-scale opportunity.
"A key focus of this strategy will be the Yellow Mountain project in New South Wales, which management believes has the potential to emerge as a flagship exploration asset within the company’s portfolio. Planned exploration programs will target the broader mineralised system across the company’s regional landholding surrounding Yellow Mountain, which management believes represents part of a larger district-scale opportunity."
Wilson also pointed to value in the Valley Bore high-grade iron ore project, where an option agreement with Newcam Minerals is under way, and to the company’s lithium joint venture with Japan Organization for Metals and Energy Security (JOGMEC).
"In addition, the company retains significant value through the Valley Bore high-grade iron ore project, where an option agreement is currently underway with Newcam Minerals, providing a potential pathway to unlock near-term value from high-grade iron ore mineralisation.
"Complementing this portfolio is the company’s lithium joint venture with Japan Organization for Metals and Energy Security (“JOGMEC”), which provides strong technical and strategic support from one of the world’s leading government-backed resource agencies. Together, these assets position the Company to capitalise on strong commodity themes while delivering a pipeline of catalysts as we progress our strategy through 2026.”
Alchemy’s Karonie and Lake Rebecca Projects location.
Acquisition terms
Completion of the transaction remains subject to a range of conditions, including Forrestania completing financial, legal and technical due diligence within 30 days, any required shareholder approval, regulatory and third-party consents, and execution of deeds of assignment and assumption relating to third-party agreements. If the conditions are not satisfied or waived within 9 months, either party may terminate the agreement.
The sale covers 16 granted exploration licences held through Alchemy subsidiary Goldtribe Corporation Pty Ltd. Together, the Karonie and Lake Rebecca projects span about 942 square kilometres of tenure in the Eastern Goldfields and Kurnalpi Terrain, about 100 kilometres east and northeast of Kalgoorlie.
As part of the acquisition, Forrestania will gain Alchemy’s interest in the Karonie inferred mineral resource, which the company said stands at 2.96 million tonnes at 1.2 g/t gold for 111,100 ounces, based on the August 2021 maiden resource covering the KZ5, Taupo and Parmelia prospects. The resource table on page 4 of the announcement also outlines higher cut-off cases, including 1.61 million tonnes at 1.4 g/t for 71,800 ounces at a 1.0 g/t cut-off.
Lake Rebecca is located near Northern Star Resources’ Carosue Dam operation and Ramelius Resources’ Rebecca deposit, while Karonie sits along the Claypan Shear Zone south of Ramelius’ Bombora deposit, highlighting the strategic position of the package within a well-endowed gold district.