Navigator to sell interest in Cummins Range

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THE BOURSE WHISPERER: Western Australian gold producer Navigator Resources has agreed terms with Kimberley Rare Earths for the sale of Navigator’s additional interest in the Cummins Range Rare Earths project.

Under the terms of the conditional agreement, Navigator will sell 30% of the Cummins Range project to KRE for the total consideration of $6.5 million comprised of $4.5 million cash and $2 million in KRE shares (to be valued at the 5 day VWAP for KRE on the 5 trading days prior to the date of the offer).

The transaction will be subject to a fair and reasonable conclusion by an Independent Expert on behalf of KRE shareholders, the approval of KRE shareholders at a general meeting and the approval of RMB Australia, as security holders over the Navigator asset.

“I understand there was strong desire from the KRE independent Board committee for KRE to move to a greater ownership position in the Cummins Range project sooner rather than later,” Navigator Resources managing director David Hatch said in an announcement.

“The sale is also in line with Navigator’s strategy of focusing on its wholly owned gold projects at Bronzewing and Leonora.

“I believe that the transaction as structured meets these objectives and is a win-win outcome for both parties.”

Once the deal has been completed it will result in Navigator moving from an approximate 9% equity in KRE to approximately 15% equity, after taking into account the in specie share distribution to Navigator shareholders, as well as receiving $4.5 million in cash.

This sale will, subject to KRE shareholder approval, immediately increase the direct ownership of Cummins Range by KRE from 25% to 55%.

Under the agreement, KRE will then be required to spend an additional $10 million on exploration and development on the project in order to take its ownership to 85%.

At that point, Navigator must elect to either contribute to the development of the project or revert to a 1.5% royalty.

Under the IPO and current JV Agreement terms, KRE holds a 25% share in the Cummins Range tenement and has the right to earn an additional 30% (to take it to 55%) through funding $10 million of exploration activities over 4 years. At that point, KRE could free carry Navigator to earn up to 80% of the project.

The new agreement, upon approval by KRE shareholders will allow KRE to take an immediate majority stake in the project. The additional direct equity in the project will confirm KRE as the majority owner with the ability to advance the project in the direction it requires and as quickly as it deems fit.