Power Metal Resources plc has conditionally sold its 49.9% share in its Australian joint venture to partner Red Rock Resources plc for up to £1.5 million.
BERRINGA
The purchase, subject to Red Rock’s due diligence and shareholders’ approval, would be payable in cash, Red Rock ordinary shares and warrants.
The two companies set up New Ballarat Gold Corporation plc in September 2021 and had previously announced plans for a London listing.
New Ballarat is the holding company for operating subsidiary Red Rock Australasia Pty Ltd (RRAL) which owns 16 gold exploration licences in Victoria and some permitted areas of state land within them totalling 2,517km2, as well as a 560km2 licence in Southern Australia.
Red Rock said that New Ballarat audited accounts in the year to 30 September 2022 showed a tax loss of £351,891, equity of £800,048 and amounts due to shareholders of £1,134,902. Power Metal is due £481,575.
Most recent activities in May 2023 focused on drilling targets in the historic Berringa mine.
Power Metal’s sale will streamline its portfolio by converting its interest into an investment and additional cash revenue, said chief executive Sean Wade.
The company will also concentrate its resources on “retained high value business interests and new opportunities”.
The proposed transaction is a related party transaction as Mr Wade is a director of RRAL and the sole executive director of Power Metal.
Red Rock said that its directors, who are independent of the acquisition, will consider whether the terms of the deal are fair and reasonable insofar as the company’s shareholders are concerned.
The transaction must complete within 13 weeks from 8 March 2024.
Red Rock will pay Power Metal in six tranches of £250,000 through convertible loan notes, cash or shares, and subject to certain milestones.
Power Metal will retain its existing gross production royalty of 0.75%. The company’s book value of its New Ballarat interests is currently £870,784.
Red Rock chairman Andrew Bell added that the company had had a successful collaborative relationship with Power Metal.
“Recent drilling results at Berringa have shown that the next step should be to push forward a process that could lead to early production, and the parties have decided that their interests will best be served at this stage by concentrating ownership in the hands of a single shareholder that can focus on these next stages of development.”
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