Kairos Minerals (ASX:KAI) has completed the sale of six non-core tenements in Western Australia to Pilbara Minerals (ASX:PLS) subsidiaries Pilgangoora Operations and Ngungaju Lithium Operations for $20 million.
The company has received the first cash payment of $10 million, and will receive the other half in either cash, or $10 million worth of Pilbara Minerals’ shares 10 business days after the agreed grant date of the overlying mining licence application (M45/1307).
Managing Director Peter Turner says receiving the first $10 million has added to the company’s $5 million cash at hand.
“We look forward to working with the Pilbara team to enter an agreement for all mineral rights to the additional 367km2 of prospective land package with known gold occurrences,” Turner says.
“This area has untested exploration potential, which we will be targeting for accelerated resource growth as part of the upcoming drilling program.”
Kairos Minerals, which has a market capitalisation of $28.94 million, intends to notify Pilgangoora shortly of its desire to begin negotiations of the mineral rights agreement.
Both companies have the right to negotiate a mineral rights agreement, which will grant Kairos Minerals the exclusive right to explore for minerals, besides lithium and tantalum, over the gold tenements.
Kairos Minerals will grant Pilgangoora or Ngungaju Lithium a 2% royalty on gross revenue on all minerals mined over these tenements.
In the event that the parties do not agree, Pilgangoora and Ngungaju Lithium will grant Kairos Minerals a 2% royalty on gross revenue on all minerals, except lithium and tantalum over the gold tenements.
Once a mineral rights agreement has been entered into, the company plans to access and explore the northwestern extension of the Mt York main trend orebody of tenement E45/2241.
Kairos Minerals plans to follow-up on Pilbara Minerals’ reconnaissance drilling in the area.
Pilbara Minerals previously drilled only 800m of the total 1,400m of strike extension of the Mt York stratigraphy. The full 1,400m of this untested, but prospective geology contains known banded iron formation that is mineralised at Mt York.
Kairos Minerals says it is confident that the mineralisation will continue along strike as Pilbara Minerals’ drillholes are mineralised on the northern and southern lines, confirming that mineralisation is open along strike to the northwest and southwest.
Under the sale agreement, Kairos Minerals has entered into a royalty deed with both subsidiaries, giving Kairos a 2% royalty on any lithium, tantalum, and gold sales by both companies over this ground.
Chairman Zane Lewis says the $10 million cash payment provides the company with flexibility going forward to evaluate additional opportunities while also growing the Mt York gold resource and complete development studies.
“We will maintain a very tight control over expenditure as we move forward with the development studies,” Lewis says.
On 1 August, Kairos Minerals agreed to sell the six prospecting licences and the overlying mining lease application to Pilbara Minerals. The tenure contains a gold resource of 23,000 ounces in two small satellite gold deposits.
Kairos Minerals wholly owns the 1.38 million ounce Mt York Gold Project in Western Australia. The project is 4km south of Pilbara Minerals’ Pilgangoora Lithium and Tantalum Mine and occurs in the same prolific greenstone belt.
Write to Aaliyah Rogan at Mining.com.au
Images: Kairos Minerals
