Aurumin Ltd (ASX:AUN) is set to sell its Mt Dimer mining leases and miscellaneous licences for a total of $3 million.
Mt Dimer hosts the high-grade Lightning and Golden Slipper deposits, which are 120 kilometres northeast of Southern Cross.
The company has secured a binding sale agreement with Beacon Minerals Ltd (ASX:BCN). As part of the agreement, Beacon has unconditionally pledged to invest $500,000 via a placement in the company within a five-day timeframe.
Net smelter royalty
Aurumin will receive $3 million on completion of the sale and a 2% net smelter return royalty on the Mt Dimer mining tenements on gold production above 12,000 ounces and on all other minerals.
This investment grants Beacon an exclusivity period, starting with the signing of the sale agreement and concluding on completion or termination. The exclusivity is intended to allow for the finalisation of due diligence and other prerequisite conditions concerning the Mt Dimer Mining Tenements.
Mining tenements being divested include M77/427, M77/428, M77/957, M77/958, M77/965, P77/4568, L77/0083, L77/0135, L77/0147, L77/328 (application), L77/329 (application), L77/330 (application), L16/135 (application).
"A good outcome"
“This is a good outcome for both parties, allowing Aurumin to unlock value from the Mt Dimer Mining Tenements on completion and have continued upside exposure with the royalty," Aurumin's managing director Brad Valiukas said.
"I look forward to Beacon putting Mt Dimer into production and processing the ore at Jaurdi. We still see plenty of upside potential at Mt Dimer and we are maintaining the exploration ground around the Mining Tenements and in the wider area.
“Importantly, this divestment will allow Aurumin to pay back a majority of the convertible note, currently with $4.4 million outstanding, that was taken on with the acquisition of the Sandstone assets in early 2022. We will continue to progress options to clear the remainder of the convertible note.
“With the planned divestment of the Mt Dimer mining tenements and the recent sale of Karramindie, the company will have a clearer focus on our Sandstone Operations as a production target.”
Details of the sale
Conditions precedent to the sale include:
- Beacon completing due diligence to its satisfaction;
- execution of formal sale agreement, royalty agreement and access agreements;
- assignment or novation (as applicable) of all relevant third-party agreements;
- obtaining all necessary regulatory, statutory and ASX approvals;
- release of all security interests over the Mt Dimer mining tenements (other than existing royalties).
The prerequisite conditions must be met by December 15, 2023, or a later date mutually agreed upon by both parties.
While the sale agreement is legally binding, its completion is contingent on several conditions precedent, including the finalisation of a formal sale agreement.
Failure to satisfy or waive these conditions will result in the agreement not being executed.
Under the terms of the placement, Beacon is set to subscribe for 20 million shares in the company at $0.025 per share, totalling $500,000.
This subscription is subject to a voluntary escrow period of six months and should be completed by October 24, 2023. The shares will grant Beacon an exclusivity period to conclude due diligence and other preliminary conditions for the Mt Dimer mining tenements.
Proceeds from the sale will go towards reducing the outstanding balance of the convertible note held by Collins Street Asset Management Pty Ltd.