Silver Lake terminates Phillips River merger

THE BOURSE WHISPERER: Silver Lake Resources has terminated the merger implementation agreement (MIA) with Phillips River Mining.

The two companies have now entered into an asset sale agreement that will result in Silver Lake acquiring Phillips River’s Munglinup project.

 

Project location. Source: Company announcement

 

The companies have drawn up an exclusivity agreement to restructure the funding for Phillips River and for Silver Lake to acquire other Phillips River assets.

Under the terms of the asset sale agreement Silver Lake will purchase Phillips River’s Munglinup project for $325,000.

The project consists of five exploration tenements.

Settlement under the asset sale agreement will occur later in the year and is subject to satisfaction of a number of conditions.

Silver Lake will immediately take responsibility for the maintenance and ongoing costs of, the tenements making up the Munglinup project.

Silver Lake terminated the MIA after running its due diligence slide rule over the deal was unable to deliver a result it found satisfactory.

Silver Lake’s main concern in electing not to proceed with the merger stemmed from the delivery schedule in a bulk concentrate offtake agreement entered into by Phillips River and LN Metals International.

The point of contention of the offtake agreement was that current market conditions and development delays meant the Phillips River project would not have been in a position to meet the delivery schedule, which is due to commence second half of 2013.

Phillips River was unable to secure changes to the offtake agreement to satisfy Silver Lake’s concerns in the timeframe required.

Phillips River said it intends to continue dialogue to resolve the delivery schedule issue and is confident it can reach a satisfactory outcome once it has more time to negotiate with LN Metals.

“A change to delivery schedules within offtake agreements is a common occurrence, especially with mines in pre-development, as it the case for Phillips River,” Phillips River chairman Hamish Bohannan said in the company’s announcement to the Australian Securities Exchange.

“However, commercial negotiations of this nature require significant time.

“Our team will continue negotiations on this front and believe a satisfactory outcome is achievable in the coming months.”