TRR Services Australia Pty Ltd - a wholly owned subsidiary of Trident Resources PLC (LSX: TRR) - will purchase royalty for $7 million.
FEL chairman Tony Sage said: “We are pleased to have agreed this transaction with Trident.
“The royalty has provided useful cash flow in recent quarters but it is not our main undertaking and its quantum is never certain, so monetising it makes it much easier for us to plan our exploration programs on the company’s key focus areas knowing we have the cash in place.
“We have a large tenement holding in the Pilbara, which is prospective for multiple commodities, so we look forward to continuing to actively explore that including follow up works to the recent drilling conduced at Hillside.”
The effective date for the sale is 1 January 2020 with the sale price to be adjusted for any funds earned by FEL after that time including the next royalty, which is due to be calculated at 31 March 2020.
Payable in two instalments
The sale is payable in two instalments, with the first instalment of $4 million payable on completion.
Trident has advised it has sufficient cash on hand to settle the first instalment.
The second payment of $3 million is payable on day after the first anniversary of completion and is secured by a specific security deed over TRR’s interest in the royalty.
Terms and conditions
Completion is subject to certain conditions being satisfied by 30 June 2020, including:
- Either the admission of all of the ordinary shares of £0.01 (issued and to be issued) of Trident to trading on the AIM Market of London Stock Exchange plc becomes effective (in accordance with Rule 6 of part 1 of the AIM Rules for Companies), or,
- Trident is readmitted to trading on the Main Market of LSE (Admission Condition) with approval of the transaction by the Foreign Investment Review Board (FIRB), and approval by the company’s shareholders.
To complete the process for admission to AIM, Trident will now complete an equity raise and has proposed to hold a general meeting of shareholders by 30 June 2020.
Previous surface sampling of this area returned a result of 18.8% copper
Drilling supports Hillside potential
Fe received encouraging results from initial drilling of the Hillside project in WA in February which support the company’s mineralised gossan model.
This first phase of preliminary drilling covered 1,798 metres in 36 holes at around 1-kilometre intervals, with best results including 1-metre at 0.74% copper, 349 parts per million cobalt, 0.41% zinc and 0.14 parts per million gold from 83 metres.
Grades in all intersections showed strongly anomalous mineralisation and provided the company with valuable guidance for hole location in the next phase of drilling.
Fe Limited has also entered into an earn-in agreement with Macarthur Minerals Limited (ASX:MIO) for 18 tenements in the Pilbara ranging from south of Nullagine to north of Pilgangoora, including Hillside.