Kingston Resources Ltd (ASX:KSN) has entered into a binding agreement to sell its 75% interest in the Livingstone Gold Project in Western Australia to Metal Bank Ltd (ASX:MBK) for total consideration of up to $10 million.
Promisingly, the company will retain strong exposure to future exploration upside at Livingstone through its holding of shares and options in Metal Bank, and future milestone payments.
Funds realised from this sale will further strengthen Kingston’s treasury position and be used for ongoing definitive feasibility study and exploration work at the flagship Misima Gold Project in PNG.
“Attractive terms”
Kingston Resources managing director Andrew Corbett said: “We are pleased to have reached an agreement with a well-credentialed, well-funded and capable counter-party in Metal Bank to divest the Livingstone Gold Project on attractive terms.
“With the increased level of activity that is now underway at the Misima Gold Project as we focus on delivering the DFS and approvals early next year, the board decided that shareholders would realise greater value through the sale of Livingstone in a structure which incorporated ongoing exposure to the project’s upside.
“I would like to thank our team for the success they have had at Livingstone in identifying new deposits, enhancing our understanding of the regional geology, and most recently identifying a number of new exploration prospects.
“We are excited that Metal Bank will be able to take on the exploration opportunity at Livingstone and look forward to seeing what that can deliver.”
The Livingstone Gold Project is near Meekatharra.
Total consideration
The total consideration is comprised of cash, shares, options and milestone payments:
- $2.5 million cash consideration;
- $1 million in MBK equity (125 million shares);
- 62.5 million options in MBK exercisable at 1.6 cents;
- $1.5 million cash payment upon the identification of a 100,000-ounce gold equivalent JORC resource or 12 months post-completion, whichever is sooner;
- $1 million cash payment upon the identification of a 250,000-ounce gold equivalent JORC resource; and
- $4 million cash payment upon the identification of a 500,000-ounce gold equivalent JORC resource
Retaining significant exposure
The transaction represents an opportunity for Kingston shareholders to realise significant value for the exploration work completed at Livingstone to date while retaining exposure to its future exploration upside as Metal Bank seeks to expand upon the existing gold resource of 49,900 ounces.
A vote is scheduled to take place on November 29, 2021, with transaction completion anticipated shortly thereafter.
The transaction will be undertaken through the sale of 100% of the issued capital in Westernx Pty Ltd, a wholly-owned subsidiary of Kingston Resources Limited.