Havilah Resources Ltd (ASX:HAV) has entered into an agreement to sell the Benagerie Mining Lease on which the Portia and North Portia projects are located to Consolidated Mining and Civil Pty Ltd (CMC).
The consideration for the transaction will include $13.5 million in staged cash payments over an 18-month period.
CMC will also fund Havilah’s Portia rehabilitation bond when the transaction is closed (expected by the end of this month), which will release $1.2 million in bank guarantee obligations.
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Importantly, the transaction allows Havilah to focus more attention on the advancement and ultimate development of the Mutooroo and Kalkaroo copper-cobalt-gold projects.
This transaction with CMC is the next logical step in Havilah’s association with CMC, which started with the 50% revenue sharing arrangement that resulted in the Portia Gold Mine being developed.
Havilah will continue to receive its current 15% gold revenue stream from the Portia gold mine until 30 November 2018, when the oxidized ore in the Portia pit is expected to be mined out based on the current mine plan.
At that time this interest will convert into a 2% net smelter return (NSR) royalty on any further gold sales from Portia.
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The royalty will increase to 3.25% on copper metal sales, once more than 101,400 tonnes of copper metal have been produced and sold from the mining lease.
Havilah will receive guaranteed payments of $300,000 per quarter from CMC if the quarterly royalty payment is not at least $300,000 per quarter by 30 November 2020.
Copper strategy – enhanced by cobalt
Havilah chief executive officer Walter Richards said: “This is a significant first transaction in the execution of Havilah’s Copper Strategy – Enhanced by Cobalt.
“This transaction realises value from our multi-commodity portfolio and will allow us to increase our focus on Mutooroo and Kalkaroo, the two core projects in our strategy, where the opportunity to add value and generate higher returns is greater.
“Bringing the Portia Gold Mine into production and building a mutually beneficial relationship with CMC has assisted us in achieving this transaction to execute our copper-cobalt strategy.
“CMC’s proven capability, diligence and tenacity, as demonstrated at Portia, provides Havilah with confidence that the North Portia project is in the right hands to generate value and future cash flow for Havilah”