Carnavale Resources (ASX:CAV) has entered into an option agreement for the sale of 80% of its non-core Grey Dam nickel-cobalt (Ni-Co) Project in Western Australia to Trans Pacific Energy Group (TPEG).
Carnavale says the sale forms part of its strategy of crystallising value from non-core exploration assets while maintaining a ‘strong’ focus on exploration and development at the Kookynie and Ora Banda South gold projects.
The $18.82 million market capitalisation company has entered into the agreement with TPEG through its wholly owned subsidiary Tojo Minerals.
Under the agreement, TPEG will pay $100,000 for a 2-year option period in 2 separate $50,000 payments.
The payments are expected to be received by Carnavale within 5 days of signing the agreement and within 5 days of the parent entity of TPEG, New Generation Minerals Group (NewGen), listing on the ASX.
Other terms and conditions of the agreement include TPEG being solely responsible for maintaining Grey Dam, the completion of legal and technical due diligence on the project, and TPEG obtaining all other necessary third party consents and approvals.
According to Carnavale, TPEG will be responsible for maintaining Grey Dam until the completion of a Bankable Feasibility Study (BFS), in the event the option is exercised.
Carnavale is expected to be free carried to the completion of a BFS.
TPEG can exercise the option with payment of $350,000 in cash and issuing $500,000 in NewGen shares at a deemed issue price of the 20-trading day volume weighted average price of NewGen shares immediately prior to the exercise of the option.
Carnavale notes TPEG will assume responsibility for its share of an existing 2% gross royalty comprising a 1% gross revenue payable on all nickel, copper, and cobalt value if any profit from them is derived and a 1% total gold production royalty to third parties.
Carnavale Resources Chief Executive Officer (CEO) Humphrey Hale says the transaction will allow the company to share in the upside with TPEG on one of its non-core assets while maintaining an ‘aggressive’ focus on Kookynie and Ora Banda.
The company’s Grey Dam Project sits about 90km northeast of the mining centre of Kalgoorlie and is considered prospective for nickel sulphide, Kambalda style mineralisation.
As of 30 September 2023, Carnavale Resources had $3.444 million cash and cash equivalents at hand, according to its latest quarterly report.
Write to Adam Drought at Mining.com.au
Images: Carnavale Resources
