Andromeda Metals Ltd (ASX:ADN) has inked an agreement through its subsidiary Peninsula Resources Pty Ltd to sell Exploration Licence 5984 on the Yorke Peninsula, South Australia, to EnviroCopper Ltd, allowing it to retain exposure to the cash flow from the tenement.
Under the deal, Andromeda will sell 100% of its interest in the Alford Project Area, along with 100% of its interest in the Moonta Project Area, excluding the Moonta Porphyry Project Area. It will sell its 90% interest in the latter.
The deal, facilitated by Thor Energy PLC (AIM:THR, OTCQB:THORF, ASX:THR), which currently holds a 30% equity interest in EnviroCopper, has been struck to expand that company's portfolio.
The agreement includes the consolidation of the Alford West joint venture (JV) and other in-situ recovery (ISR) amenable targets within the licence.
Andromeda takes share of capitalisation
Andromeda stands to receive a 5% share of ECL's current capitalisation, equating to 203,008 shares, alongside a cash payment of $50,000.
It will also receive deferred consideration as a 10% share of any successful mining operations' Royalty Tenement Operating Cashflow in both the Alford West and Moonta Project areas, capped at $15 million each.
The company will also be entitled to an additional 2.5% of ECL's capitalisation, which amounts to 101,504 shares, upon the successful completion of a Site Environmental Lixiviant Test (SELT).
The agreement also specifies that once a mining lease is granted, Andromeda will receive an additional $150,000 cash payment, along with royalty payments from the operating cash flow.
Thor's 30% equity in ECL will be diluted to 28.6% following the initial 5% payment to Andromeda.
Andromeda CEO and managing director Bob Katsiouleris said: “The sale of these assets continues our consistent approach to implementing our corporate strategy, through divesting non-core assets to support the commercialisation and development of The Great White Project.”