Horizon Minerals Ltd (ASX:HRZ) has agreed to a binding option and sale agreement with Metal Hawk Ltd (ASX:MHK) relating to seven tenements within the company’s Yarmany project area near Kalgoorlie, WA.
The option covers all mineral rights over an area of 98 blocks at Yarmany West.
Metal Hawk will be allowed to explore for minerals on the tenements during the option period and must meet annual expenditure commitments to keep them in good standing.
Terms of agreement
Metal Hawk will pay Horizon a non-refundable option fee of A$400,000 consisting of $200,000 in cash and $200,000 worth of Metal Hawk shares within five days of signing the option.
Metal Hawk is also obligated to incur a minimum of A$1 million in on-ground exploration expenditure on the tenements before exercising the option, which has a term of 24 months.
However, should Metal Hawk decide to withdraw from the option, a 30-day notice period is required, or it may allow the option to lapse after incurring a minimum of $500,000 in exploration expenditure. In either case, all tenure will remain 100%-owned by Horizon.
If Metal Hawk chooses to exercise the option, Horizon may sell 100% of its interests in the tenements to the former for A$1 million, which can be settled in cash, shares or a combination of both at Metal Hawk's discretion.
Alternatively, Horizon can opt to sell 80% and retain the balance until a decision is made to mine, at which point, a joint venture will be formed between the two companies.
Yarmany project area. Tenements in question are on the left.
Divesting non-core assets
“The option and sale agreement is a positive outcome for both parties,” Horizon chief executive officer Grant Haywood said.
“It fits with Horizon’s strategy of focusing on gold assets we can bring into production and rationalising our large tenement holding where value can be realised by divesting non-core assets to capable groups who can take them forward.
“This transaction also strengthens our balance sheet and reduces our holding costs.
“We have a strong relationship with Metal Hawk and, as a shareholder and potential JV partner, we wish them well in advancing this prospective early-stage project.”