CuFe (ASX:CUF) has entered into a binding sale and purchase agreement with Northern Star Resources (ASX:NST) for the sale of a 2% net smelter royalty for $4 million over the Crossroads Gold Project in Western Australia.
The NSR was granted to CuFe’s wholly owned subsidiary Jackson Minerals, as part of the consideration for the sale of M24/462, which hosts the deposit, to Barrick Gold (NYSE:GOLD) in 2013.
As a result of conducting various assignments, Northern Star is the current owner of that mining licence.
CuFe, which has a market capitalisation of $9.35 million, plans to use the $4 million to progress its suite of exploration and development projects.
The company will focus primarily on the Tennant Creek Project, but intends to include allocations to its other assets such as the West Arunta region. In the region, a heritage agreement was recently signed to facilitate exploration and approvals for the Yarram Iron Ore Project.
Executive Director Mark Hancock says Tennant Creek is a “hot” area right now and the funds enable the company to increase its focus there.
“Having considered the pros and cons of holding the royalty through to commencement of mining operations and possibility of receiving additional funds over a longer period of time, we believe the certainty of knowing what we will receive from the deal and being able to plan our work programs accordingly offers the best option for us,” Hancock says.
“The value of royalty streams is always uncertain when they form part of the consideration for a tenement sale so to receive $4 million cash for an asset that was sold more than 10 years ago is a great result for CuFe and its shareholders.”
The company expects the agreement to be completed within five business days of signing, unless otherwise agreed by the parties involved.
Tennant Creek, which comprises three copper and gold resources, hosts an existing resource of 7.3 million tonnes of copper at 1.7% and 0.6 grams per tonne gold. The project sits 30km north-west of Tennant Creek in the Northern Territory.
CuFe is an Australian mineral explorer and producer focused on assets prospective for copper, gold, and iron ore in mining-friendly jurisdictions.
Write to Aaliyah Rogan at Mining.com.au
Images: CuFe
