Mandalay Resources Corp, the metals miner, reported that Australia-listed Equus Mining Ltd (ASX:EQE) will buy its Cerro Bayo mine in Region XI, Southern Chile, having now exercised a 2019 option on the asset.
The transaction is due to be completed on December 1 this year and Equus will buy the project, including all its mining properties, resources and mine infrastructure as well as a 1,500 tonnes per day (tpd) processing plant.
In exchange, Mandalay will receive 19% of Equus’ share capital and a 2.25% net smelter royalty (NSR) on production from the Cerro Bayo mining claims once the mine has produced at least 50,000 ounces of gold equivalent, subject to a re-purchase option in favour of Equus.
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Equus will also assume 50% of approved site closure costs at Cerro Bayo, with Mandalay responsible for the remaining 50%.
In addition, Equus will appoint Ryan Austerberry, Mandalay’s Costerfield (Australia) mine general manager, to the board of Equus as a non-executive director representing Mandalay.
Mandalay aims to create shareholder value through profitably operating both its Costerfield and Björkdal (Sweden) mines. It continues to mine the high-grade Youle vein at Costerfield, which supplies high-grade ore, and is also focused on extending Youle’s reserves at depth.
At Björkdal, Mandalay aims to increase production from the Aurora zone in the coming years, in order to maximize profit margins.
Contact the author at giles@proactiveinvestors.com