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Gindalbie Metals sells Shine Hematite Deposit for $15m to Mount Gibson Iron

Gindalbie Metals sells Shine Hematite Deposit for $15m to Mount Gibson Iron

Gindalbie Metals (ASX: GBG) has crystallised value from the wholly-owned Shine Hematite Deposit in Western Australia, selling it for $15 million plus a trailing price participation royalty to Mount Gibson (ASX: MGX).

The Shine Hematite Deposit is located 40 kilometres north-east of the Karara Project, and has been substantially progressed with a Feasibility Study completed and approvals well advanced.

It forms part of Gindalbie’s broader 1,900 square kilometre regional exploration portfolio in the Midwest region.

The proceeds of the sale will further strengthen Gindalbie’s balance sheet, further increasing its cash resources which currently stand at around $35 million.

Details of the deal

Under a binding Term Sheet executed between the companies, Mt Gibson will acquire the iron ore rights over the Shine tenements for an upfront consideration of $12 million.

A further milestone payment of $3 million is due on the first commercial sale of iron ore – effectively a non-refundable pre-payment on a price participation royalty.

Under this royalty, on a month average for every A$1 the Platt’s 62% price is above A$115 per tonne Gindalbie will receive an additional A$0.20 per tonne sold with the $3 million having been prepaid under the milestone payment.

The parties have 90 days to conclude definitive agreements for the transaction and meet conditions precedent.

Karara Project

Gindalbie's focus remains on the Karara magnetite project as it continues a ramp-up to full Stage 1 capacity.


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June 12 2013

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