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Boadicea Resources leverages strategic Fraser Range tenements sale to grow company

Snapshot

The company is well-placed after the sale of 9 of its 11 tenements in the Fraser Range to IGO Ltd to explore additions to the portfolio.

Boadicea Resources - Boadicea Resources leverages strategic Fraser Range tenements sale to grow company

Quick facts: Boadicea Resources

Price: 0.28 AUD

ASX:BOA
Market: ASX
Market Cap: $15.57 m
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Boadicea Resources Ltd's (ASX:BOA) transformational agreement for IGO Ltd (ASX:IGO) to acquire nine Fraser Range licences is strong acknowledgement of the potential of the tenements to host another nickel-copper sulphide deposit.

The Fraser Range has attracted global attention due to the three deposits delineated in the region – IGO’s operating Nova mine, Legend Mining Limited’s (ASX:LEG) Mawson discovery and Creasy Group’s Silver Knight.

In announcing the deal to the market, IGO managing director Peter Bradford particularly singled out The Symons Hill tenement as the area which represents the extension of the Nova mafic-ultramafic intrusive system.

The White Knight and Transline tenements also hold potential due to their proximity to the Legend and Creasy discoveries.

Strong Fraser Range foothold

Boadicea has established a strong Fraser Range foothold in recent years and is confident of the prospectivity for nickel sulphides.

The company’s managing director Jon Reynolds said the potential sale price to IGO’s Newsearch was $57 million, plus a royalty payment.

He said: “The deal includes a $5.5 million upfront payment and there’s a subscription of 6.25 million shares of Boadicea shares for an issue price of 24 cents for a consideration of $1.5 million - so there’s an influx of cash coming into the company.

“It gives IGO exclusive rights to explore for nickel within those tenements for a period of five years and Boadicea is 100% free carried through that period, maintaining the ownership of the licences for that term.”

Cash injection

The agreement provides a substantial cash injection and a unique opportunity to leverage the exploration skills of Newsearch to explore for nickel sulphide mineralisation - allowing Boadicea upside participation from any discovery.

If IGO is successful in discovering a deposit and produces a JORC resource statement with the five-year term, Boadicea will receive a $50 million payment for the purchase of the assets.

Reynolds said: “This makes the total package of consideration $57 million.”

Net smelter return

On top of this, Boadicea also has a net smelter return royalty of 0.75% of any revenues that come out of those tenements.

Reynolds said: “Through that royalty, we’re maintaining a component of the upside that might happen.

“This allows us to bring cash into the company and also maintains our presence in the Fraser Range.”

The transaction is subject to shareholder approval at the company’s general meeting on October 14, 2020.

The company’s assets in the Fraser Range.

“Unprecedented coverage”

Reynolds said that IGO was highly encouraged by the prime location of Boadicea’s tenements.

He said: “All of our tenements are closely associated with all the existing exploration success targets in the region.

“Our Symons Hill tenement is directly along strike, due north of the Nova-Bollinger lease, about 5-7 kilometres away from that deposit.

“We also have four tenements directly adjacent to the recent Mawson discovery by Legend Mining, and we’re exceptionally close to the Creasy Group’s Silver Knight deposit as well.

“We’ve got unprecedented coverage for a junior of our size in the Fraser Range.”

Notably, Legend recently reported 12.95 metres of massive nickel-copper sulphides in diamond hole RKDD023 within a +90-metre intercept of sulphide mineralisation at Mawson – another boost for the prospectivity of Boadicea’s nearby tenements.

Actively exploring tenements

The company also has two more tenements in the Fraser Range not included in the IGO deal, that are being actively explored.

Reynolds said: “We still have other tenements that we’re actively exploring that we are quite excited about.

“We’ve actually started working on the tenements that we’ve got at Fraser Range South and Southern Hills.

“We’ve done some geochem work and we’re waiting for those results.”

Notable landholders in the Paterson Range.

Paterson Range potential

Boadicea also has a tenement in the much sought-after Paterson range, which is highly prospective for gold-copper targets with tenement positions dominated by Newcrest Mining Limited (ASX:NCM), Rio Tinto Limited (ASX:RIO), Fortescue Metals Group Limited (ASX:FMG) and Antipa Minerals Ltd (ASX:AZY).

Reynolds said: “We have a tenement called Koongulla in the Paterson Range which is hot property right now.

“We’re doing some work on the geophysics with the intent of doing airborne geophysics later in the year.

“The company has fantastic exposure in the Fraser Range - and now the Paterson Range as well - so we’re quite excited about the future.”

Adding to the portfolio

Reynolds said the fact the company had received money from the IGO transaction and still retained exposure to the Fraser Range was great leverage for the company’s expansion plans.

He said: “We want to grow the company beyond the exposure to the Fraser Range and the Paterson Province that we currently have and are actively looking for additional projects to add to our portfolio.

“This [IGO deal] is providing us a really strong basis to expand the company because they are doing the work and spending the money while we reap the benefits.

“It allows us to go and explore other opportunities, which is very exciting for us as a junior.”

The company is reviewing several exploration projects in gold and base metals.

8 cent dividend

Subject to shareholder approval of the asset sale, an unfranked special dividend of 8 cents per share to be paid to shareholders registered on October 12, 2020

Reynolds said: “We are returning an 8-cent dividend back to shareholders - that’s close to $4.5 million.

“Our shareholders have been loyal to the company for a number of years.

“That’s going to leave us around $2.5 million for general working capital, to progress our projects and allow us to explore new business opportunities.”

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Boadicea Resources Ltd's Jon Reynolds outlines 'significant' Fraser Range...

Boadicea Resources Ltd's (ASX:BOA) Jon Reynolds speaks to Proactive's Andrew Scott after announcing an agreement with a subsidiary of major Fraser Range producer IGO Ltd (ASX:IGO) for the sale of nine exploration licences on the range. The potential consideration of $57 million from IGO’s...

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