The consideration includes $500,000 in cash and about 13.3 million shares in RareX’s parent company Sagon Resources Ltd (ASX:SG1) at a deemed price of 3.75 cents per share.
The sale agreement also includes a number of future payments as follows:
- Within twelve months of settlement of the acquisition, RareX/Saigon must pay $500,000 in cash and issue $500,000 in shares in Sagon or pay $1,000,000 in cash (deferred consideration).
- Within 36 months of settlement, and subject to the completion of a positive Bankable Feasibility Study (BFS) on the Cummins Range project, RareX/Sagon must pay or issue $1,000,000 in cash or Sagon shares or a combination thereof to a total value of $1,000,000 (further deferred consideration).
- If a BFS is unable to be completed within 36 months of the date of settlement, the further deferred consideration is not payable and RareX will, in lieu, grant E25 a 1% net smelter return royalty on future production from the Cummins Range project capped at $1,000,000.
The Cummins Range sale is a positive outcome for E25 as the additional cash will provide valuable working capital to complete the pre-feasibility work at the 100% owned Butcherbird High Purity Manganese Project.
E25 had completed a positive scoping study with respect to developing the deposit to produce high purity manganese sulphate for lithium-ion battery cathodes as well as electrolytic manganese metal for use in certain specialty steels.