Aurumin Ltd (ASX:AUN) has finalised the divestment of 51% of the Mt Palmer Project in Western Australia’s Southern Cross region to Kula Gold Ltd (ASX:KGD) enabling the company to more fully focus on its Sandstone Gold Project.
The Mt Palmer Project is 40 kilometres southeast of Southern Cross and is home to the Mt Palmer mine that has a history of high-grade production, producing approximately 158,000 ounces of gold at 15.9 g/t before ceasing commercial operations in 1944.
This divestment was finalised after the satisfaction of all conditions precedent to the transaction.
Terms of agreement
Aurumin has received 2.5 million Kula shares, valued at $250,000, and Kula has acquired a 51% interest in the tenements and mining information.
By spending $1 million over three years Kula will earn a further 29% interest and thereafter spending will be pro-rata or Aurumin will dilute.
Aurumin's managing director Brad Valiukas said: “This is the last of our planned divestments in the Southern Cross area. We are pleased to see Kula now positioned with 51% of the Mt Palmer Project and we look forward to them increasing their stake to 80%.”
The company’s equity position will convert to a 1% gross royalty if it dilutes to less than 10%.
If Kula elects not to proceed with the second stage earn-In, or does not satisfy the condition within the three-year period Aurumin shall be able, at its sole discretion, to purchase back a 2% Joint Venture Percentage Share in the tenements for A$1.
Kula will be responsible for maintaining tenements in good standing.
Focus firmly on Sandstone
“Subject to successful completions and ongoing earn in spend by JV partners, Aurumin will be positioned with a 20% interest in the Mt Palmer JV, a royalty on the Mt Dimer mining tenements for gold and silver with Beacon Minerals and the potential future royalty on the Mt Dimer exploration tenements with MinRes,” Valiukas said.
“There still remains significant potential at Mt Palmer and we look forward to our continuing participation as Kula gives the project the attention it deserves.
"Aurumin’s focus is at now firmly on Sandstone and generating the critical mass required for future production.”