Perth-based exploration company Liontown Resources (ASX: LTR) has agreed to offload its 100%-owned base metals deposit in North Queensland to Kagara (ASX: KZL) for $4.5 million.
The deal comprises 2,244,837 Kagara shares, based on a 5 day VWAP and $2.25M upon either a decision to mine or the sale of the purchased assets by Kagara.
The sale includes Mining Lease 10277 which contains the 1.8 million tonne Liontown zinc-lead deposit and rights to base metal exploitation on 16 sub-blocks of the surrounding Exploration Permit.
Liontown will retain a holding of approximately 4,000 square kilometres under title or application.
The sale is subject to the standard Ministerial consent for the transfer of an ML and also the renewal of EPM14161. Notwithstanding those conditions, completion will take place on or about 6 January 2010 when the Kagara shares will be issued.
In the event the conditions subsequent are not met, Liontown will have the option of relinquishing its interest in the Kagara shares or paying to Kagara $2.25m.
The transaction would then be terminated and the properties returned to Liontown.
The area covered by the transaction adjoins Kagara’s Waterloo deposit.
Liontown Managing Director Doug Jones, said given Kagara’s ownership of the nearby Waterloo deposit and the Thalanga processing facility, Kagara was a natural purchaser of the project.
Dr Jones said the sale would allow Liontown to focus on the exciting new gold prospects it has identified on the Mount Windsor Project.