PNX Metals Ltd (ASX:PNX) will divest the non-core Moline project in the Northern Territory to Sovereign Metallurgical Pty Ltd for total consideration of up to $3.0 million.
This arrangement will also see PNX refund the existing tenement bond of approximately $300,000.
Apart from enabling the company to focus fully on its core assets in the Northern Territory, the divestment will see Ausgold Trading Pty Ltd, a related party to Sovereign, waive PNX’s final payment of $700,000 for the Glencoe gold project.
Another benefit for PNX is the granting of a Net Smelter Returns Royalty of 1% over gold/silver and 2% over any other metals produced from Moline.
“Realises immediate value”
PNX managing director James Fox said: “The proposed divestment of a non-core asset realises immediate value for PNX and allows the company to focus on the development of its 100%-owned Fountain Head gold and Hayes Creek gold, silver and zinc projects located in the Pine Creek region of the Northern Territory.
"In addition to the waiver of $700,000 payable with respect to the Glencoe project, PNX will retain significant future value by way of a Net Smelter Returns Royalty of 1% over gold/silver and 2% over any other metals produced, and cash, or shares in any listing transaction of up to a further $2.25 million, at our election, upon transfer of Moline title, which is to occur within the next 18 months.”
With the waiving of the Glencoe final payment the Glencoe title will be transferred to PNX contemporaneous with execution of the Moline agreement.
Divestment outcomes
Other outcomes of the divestment include:
- PNX has received a non-refundable deposit of $50,000;
- PNX to have a first right of refusal to toll treat any gold/silver mineralisation from Moline through the proposed Fountain Head and Hayes Creek process plants;
- PNX will appoint Sovereign as operator at Moline to undertake exploration and associated activities for up to an 18-month period, subject to the terms of the agreement; and
- A second payment on completion at PNX’s election of either $1.5 million in cash or $2.25 million of new fully paid ordinary shares at the same price and ranking equally with any shares issued under a proposed listing transaction in which Moline is an asset, at the time of listings approval, within 18 months of execution of the agreement.
Exploration program
"We look forward to continuing with a significant program of exploration and development activities on our core projects,” Fox added.
"Diamond drilling has been completed at Glencoe and an updated mineral resource is pending. Planning is underway for a larger RC drill program at Glencoe which will start after the NT wet season and when ground conditions improve.”