THE BOURSE WHISPERER: Middle Island Resources (ASX: MDI) has finalised the transaction for the divestment of the Reo gold project in Burkina Faso, West Africa.
Middle Island Resources has executed a formal Option to Purchase Agreement with TSX(V)-listed Tajiri Resources Limited, which provides Tajiri with the option to acquire 100 per cent of MDI’s interest in the project.
In turn, Tajiri gave notice it will enter the 18-month exclusive option period and now has 15 days to pay to MDI a US$150,000 option fee and issue 5 million Tajiri shares to MDI.
During the Option term Tajiri must pay all expenses associated with maintaining the Reo project permits in accordance with Burkinabe law.
Should Tajiri exercise the Option, it will pay a further US$150,000 to Middle Island, however, if it has not exercised the Option within 12 months, it will be required to pay US$50,000 to Middle Island as a non-refundable advance on the Option exercise cash consideration, with the balance of US$100,000 payable if the Option is exercised during the remaining six months of the Option term.
If the Option is exercised within the first 12 months the full US$150,000 is payable on exercise.
If the Option is exercised by Tajiri, Middle Island will retain a two per cent net smelter return (NSR) royalty on any minerals derived from the Reo project.
Tajiri has the right to acquire that royalty from Middle Island for US$5 million.
If the Option is not exercised by Tajiri, Middle Island will retain all consideration already paid and continue to own its 100 per cent interest in the Reo project.
“This divestment is in line with Middle Island’s strategy to focus on developing the Sandstone gold precinct in Western Australia into a thriving gold hub, processing local deposits through the company’s 100 per cent-owned Sandstone mill,” Middle Island Resources managing director Rick Yeates said in the company’s announcement to the Australian Securities Exchange.