THE BOURSE WHISPERER: Polymetals Mining (ASX:PLY) has entered into an agreement to acquire 100 per cent of the shares in Lansdowne Resources.
But wait, there’s more – the deal also comes with the associated rights to earn into a 75 per cent share of the Turner River gold and base metals Joint Venture and the option to purchase a 75 per cent interest in the Wingina Well gold resource.
The Turner River project is located south of Port Hedland within a granite-greenstone terrane of the Pilbara Craton of Western Australia.
Turner River gold and base metal project areas. Source: Company announcement
“Polymetals is committed to seeking growth opportunities that benefit from the company’s proven skills in developing projects quickly and economically,” Polymetals Mining chief executive officer Frank Terranova said in the company’s announcement to the Australian Securities Exchange.
“The Turner River project is one such opportunity and we are excited about its potential.”
Polymetals said it considers the Turner River project to be prospective for additions to the existing resources and discovery of additional resources.
Mineral Resources at the Wingina Well project have been estimated at 5.1 million tonnes at 1.34 grams per tonne gold for 220,000 ounce of gold and will be the initial focus of exploration with the objective to rapidly progress the project to a development decision.
The purchase consideration to be paid to Lansdowne’s shareholders comprises:
– Upfront payment of $0.5 million cash and $0.75 million of fully paid Polymetals shares; and
– $0.5 million of fully paid Polymetals shares or cash at the sellers’ election in nine months from date of acquisition.
Milestone payments will be made to the sellers upon the development of a Gold project as follows:
– $0.75 million of fully paid Polymetals shares or cash at Polymetals’ election upon decision to mine; and
– $0.75 million of fully paid Polymetals shares or cash at Polymetals’ election upon first production.
The following milestone payments will be made to the sellers upon the development of a Base Metals project:
– $1.0 million of fully paid Polymetals shares or cash at the sellers’ election upon definition of a 0.75 million ounce gold equivalent Resource: and
– $1.0 million of fully paid Polymetals shares or cash at the sellers’ election upon a decision to mine.
Tenements comprising the Turner River gold and base metals projects are the subject of a farm-out and joint venture agreement with De Grey Mining (ASX:DEG) under which Lansdowne may earn a 75 per cent interest in the project by funding exploration expenditure of $2 million and $1.5 million respectively over three years, which commenced in May 2011.
Exploration expenditure by Lansdowne to date is approximately $1.1 million and therefore the Polymetals’ requirement to earn into the Turner River projects is a further $2.4 million by May 2014.