Krakatoa Resources' (ASX: KTA) are likely to climb after reaching a strategic alliance with Indonesian iron ore producer Sitasa Group and secured a $5 million funding facility from Melbourne-based Gurney Capital Nominees to progress its Indonesian exploration projects.
As part of the alliance, the company has signed a share purchase and sale agreement with Sitasa to acquire 99.8% of an Indonesian company holding an iron ore exploration license in West Sumatra.
The BCS Tenement covers an area of 500 hectares and is located in Nagari Alam Pauh Duo, Pauh Duo sub-district, South Solok, in West Sumatra.
It has also obtained the exclusive first right of refusal to Sitasa Group’s pipeline of iron ore exploration projects for the next two years.
These five projects are located in West Sumatra, Aceh, Central Kalimantan, and Central Sulawesi.
The transaction is subject to ASX and any other regulatory approvals as well as Krakatoa electing to complete the transaction.
Krakatoa will pay US$150,000 upon signing of the Purchase Agreement and will issue 5 million shares to Sitasa upon closing of the transaction.
The $5 million Standby Subscription Agreement allows Gurney to subscribe for shares if requested by the company.
Shares will be issued to the value of the drawdown notice at an Issue Price of 80% of the 5 day VWAP prior to the issue of the shares.
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