Aurumin (ASX:AUN) has signed a binding term sheet for the sale of its Mt Palmer Project in Western Australia to Kula Gold (ASX:KGD).
Located 40km south-east of Southern Cross, the project is home to the Mt Palmer mine that historically produced 158,000 ounces of gold at a grade of 15.9 grams per tonne.
According to the agreement, Kula will pay $250,000 in shares or cash to acquire a 51% interest in the tenements.
Kula will then be required to spend $1 million to earn an additional 29% interest over a three-year period, while Aurumin’s equity position will convert to a 1% gross royalty if its ownership dilutes to less than 10%.
Should Kula elect to not proceed with the second stage of the earn-in, or fails to satisfy certain conditions, Aurumin can purchase back a 2% share of the joint venture tenements for $1.
Aurumin Managing Director Brad Valiukas says this is the company’s last planned divestment in the Southern Cross area.
“Subject to successful completions, Aurumin will be positioned with a 20% interest in the Mt Palmer JV, a royalty on the Mt Dimer mining tenements for gold and silver with Beacon Minerals (ASX:BCN), and the potential for future royalty on the Mt Dimer exploration tenements with Mineral Resources (ASX:MIN),” Valiukas says.
“There still remains significant potential at Mt Palmer, and we look forward to our continuing participation as Kula gives the project the attention it deserves. Aurumin’s focus is now firmly on Sandstone and generating the critical mass required for future production.”
The Central Sandstone Gold project was acquired by Aurumin in early 2022 and hosts an 881,300-ounce gold resource. In addition to the Johnson Range and Birrigin projects, it forms the basis of the company’s Sandstone Gold Operations.
Write to Aaliyah Rogan at Mining.com.au
Images: Aurumin
