Oar Resources Ltd (ASX:OAR) has agreed to sell its non-core Bramfield Iron Ore Project in South Australia to Vietnamese based company The Hao Phat Group via its subsidiary Dragon Resource Investment Pty Ltd for an all-cash consideration of $500,000.
The definitive and binding Tenement Sale Agreement is part of Oar’s ongoing strategic review to rationalise its portfolio, whilst generating cash from non-core assets, to apply towards its core assets.
The all-cash sale of Bramfield represents significant additional non-dilutive funding that will help strengthen Oar’s balance sheet, so it can focus on targeted exploration of the Crown Nickel-Copper-Cu-PGE Project as well as its gold assets.
The 100%-owned Crown Project in Western Australia is near Chalice Mining’s world-class Julimar polymetallic discovery.
Its 100%-owned US gold assets are in the highly prospective gold province of Nevada, United States - ranked the third best mining jurisdiction in the world.
These projects host several multi-million-ounce deposits.
Oar "in a favourable position"
"The sale of the Bramfield Iron Ore project is a great outcome for Oar Resources. The company will continue to evaluate opportunities to sell other non-core assets that generate non-dilutive cash and improve its balance sheet,” OAR managing director Justin Richard said.
“Anyone who knows mineral exploration, knows the early stages in a project’s lifecycle present high-risk, high-reward opportunities. OAR is in a favourable position compared to many of its peers, having a diverse project portfolio that includes several promising projects with potential to become standalone mining companies.
“The current review of the company’s project portfolio includes divesting any projects that are not part of OAR’s key focus moving forward, mainly among our South Australian projects. Some factors being considered as part of the strategic review include a project’s stage of development, the commodities it offers and its impact on shareholder value.”
Oar is in continuing discussions with potential buyers on some of its other South Australia assets.
Bramfield fits divestment bill
Bramfield Iron Ore Project is on the Eyre Peninsula in South Australia, and sits within Exploration Licence 6558.
The project was one of the original assets of Oakdale Resources Limited and has been considered a non-core asset for some time given Oar’s focus on its Crown Project, the Douglas Canyon Gold Project in Nevada and the Gibraltar Halloysite-Kaolin Project in South Australia.
The Bramfield Iron Ore Project area will be excised by conditional surrender and the remaining portion of EL6558 will be retained by Oar.
“In the case of the Bramfield Iron Ore Project, it was not adding value and has not been a priority for the company at any stage. The company's other projects offer better opportunities to increase shareholder returns and this sale realises value where there was previously none,” Richard said.
“More important than injecting $500,000 cash into the company is how the company uses this and other funds to compound value on its core project assets.
"With graphite, gold, nickel, copper, PGE and halloysite-kaolin projects still in hand, we envisage the revised project portfolio to be focused on a stable of one or two core projects that we consider capable of advancing toward feasibility study, with the most promising projects being retained.
"Any non-core asset that can be divested to raise cash and increase OAR’s value and its ability to leverage other projects will be considered.”
Terms of the sale
Oar will be paid $500,000 in case, with a deposit of $100,000 being laid down today.
The balance will be paid on settlement.
Further to this:
- The balance will be paid pending satisfaction of the condition precedent, which is the excise of the exploration area comprising the Bramfield Iron Ore Project from the company's EL6558 by conditional surrender and the consequent issue to DRI of a new Exploration Licence in respect of the Bramfield Iron Ore Project only;
- The process of excising the exploration area and the consequent issue of a new Exploration Licence to DRI will be managed by Oar at the expense of DRI; and
- The expected date for completion of the transaction is three months from February 10, 2022.