Cauldron Energy (ASX:CXU) has agreed to terminate a 2020 purchase agreement regarding numerous river sand leases located at the mouths of the Onslow, Carnarvon, and Derby rivers in Western Australia.
As such, the company will retain all of the Onslow tenements and will not be liable to pay any further initial share consideration, nor production payments or royalties.
CEO Jonathan Fisher says the time and cost of work necessary to gain approval to mine was considered too significant to be commercial, with risk that approval would not be gained.
Cauldron will also cancel issuing two million out of eight million of the initial share consideration.
The vendors will retain the Carnarvon and Derby tenements.
As part of the purchase agreement, Cauldron was required to issue 20 million shares, in which eight million shares have been issued. The company was also required to pay $250,000 for the Carnarvon tenement upon entering into commercial production, alongside $250,000 for the Derby tenements and a further $500,000 for Onslow.
A royalty equal to $1 per tonne or 2% of sales revenue where Cauldron elects to conduct a mining operation was outlined in the acquisition agreement.
Fisher notes the elimination of the production payments and royalty from Onslow removes an impediment for dealing.
“This allows us to retain the most advanced sand tenements – including a mining lease on which there has been historical production – and for which we continue to consider commercial transactions with third parties,” he says.
“Further, the holdings in the Onslow area are strategic for Cauldron as we continue to plan for the future development of the Yanrey uranium project.”
Cauldron Energy is a uranium-focused company that owns the Yanrey Project. Yanrey covers 1,150km2 and lies 85km south of Onslow.
Write to Aaliyah Rogan at Mining.com.au
Images: Cauldron Energy
