THE BOURSE WHISPERER: Clancy Exploration (ASX: CLY) has agreed to sell the company’s Joint Venture interests in six copper-gold projects in New South Wales to its joint venture partner, Gold Fields Australasia.
Gold Fields Australasia is wholly-owned subsidiary of Gold Fields Limited.
Clancy will receive a total of $1.5 million from a combination of the sale consideration and a placement of shares to a related body corporate of Gold Fields.
Terms of the deal include:
1. The sale consideration will be $1 million in cash which is to be paid immediately upon settlement.
2. The equity component of $500,000 will be received immediately upon settlement of the placement, which is to be done at 3.5c per share – a 75 per cent premium to the current share price of 2c per share.
3. Clancy will retain its 2.5 per cent Net Smelter Return (NSR) royalties on the six projects (in addition to Wellington North), subject to Gold Fields having the right at any time to purchase the NSR’s for $20 million each.
4. Both parties’ pre-emptive rights and the Gold Fields back-in right on the Gobondery project will be terminated.
“Gold Fields and Clancy have been partners in NSW since 2004 and in that time the portfolio and the priorities of each party have evolved,” Clancy Exploration managing director Gordon Barnes said.
“This deal will enable Clancy to focus on generating value from its 100 per cent-owned projects without restriction and the cash and equity component will strengthen the company’s balance sheet and provide capital for ongoing exploration and/or project acquisition.”
Clancy has a minority interest in six joint ventures that Gold Fields is earning, or has earned, an 80 per cent interest in.
Once Gold Fields has earned 80 per cent equity in each of the projects, Clancy is required to either fund its share of the exploration cost, or dilute.
“Clancy’s priority is to fund projects that will generate the most shareholder value,” Barnes said.
“Raising finance to fund a minority JV interest is a difficult proposition.
“We have already been diluted to an NSR on the Wellington North JV and it is quite likely that we would dilute in future on the others.
“Keeping the NSR’s provides cash upside in the event of a future discovery by Gold Fields.
“The Board is currently working through a number of new project opportunities which, if they materialise, we hope would provide better leverage for Clancy shareholders than what is offered by the Gold Fields JV projects.”