THE BOURSE WHISPERER: Breakaway Resources (ASX: BRW) has reached agreement to sell the company’s Scotia project to Minotaur Exploration (ASX: MEP) for a consideration of $600,000 in cash.
The Scotia project, located 65 kilometres north of Kalgoorlie in Western Australia, comprises a 160 square kilometre package portfolio of 14 tenements, and is considered to be prospective for both gold and nickel.
Scotia project. Source: Company announcement
In 2011, Breakaway signed a Farm-in and Joint Venture Agreement with Aphrodite Gold (ASX: AQQ), under which Aphrodite is earning up to an 80 per cent interest in the Scotia project gold rights by spending $1.5 million over 4 years.
So far Aphrodite Gold has focused its exploration efforts at the Chameleon prospect, where Breakaway said it has reported some encouraging results.
The proposed sale of Scotia project will allow Breakaway to focus on the company’s major project – the Eloise copper-gold project in North Queensland, as well as its Leinster gold project in Western Australia.
“This sale follows an ongoing review of our non-core tenement holdings in WA, including our extensive nickel portfolio, and represents a sensible rationalisation of our asset base,” he said.
“The proceeds from this transaction will boost our working capital position in what is clearly a very challenging market environment for junior explorers,” Breakaway Resources managing director Victor Rajasooriar said in the company’s announcement to the Australian Securities Exchange.
“This will enable us to continue to progress upcoming exploration activities including further drilling at Eloise and planned drilling to test some of the exciting new gold targets identified recently at Leinster.”
Under the Sale and Purchase Agreement, between Minotaur’s wholly-owned subsidiary Minotaur Gold Solutions and Breakaway’s wholly-owned subsidiary Scotia Nickel, Minotaur will acquire 100 per cent of the rights to all minerals other than gold and the right to no less than 20 per cent of the gold deposits discovered on the tenements for total consideration of $600,000 cash (plus GST).
The agreement is conditional on completion of detailed due diligence and receipt of Ministerial approval for the transfer of the tenements to Minotaur.
It is also conditional on Breakaway entering into a deed with Norilsk Nickel releasing it from all of its obligations under a Clawback Agreement and converting its rights into a 2.5 per cent net smeler return on nickel, copper and platinum group elements (PGE), and Aphrodite Gold also not exercising its pre-emptive rights to purchase the remaining 20 per cent of the gold rights on the same terms offered by Minotaur Exploration.