Western Mines Group (ASX:WMG) has signed a deal to buy back and extinguish the 1% net smelter return royalty at the Mulga Tank Project in Western Australia.
The royalty, which covers tenement E39/2132, was offered to the original seller of the landholding as part of the acquisition package. The tenement is a key part of Mulga Tank, spanning 80km2, and contains the main body of the Mulga Tank Ultramafic complex.
In order to buy back the royalty, Western Mines will issue to the original seller of the E39/2132 tenement 800,000 shares — half of which will be escrowed for 12 months — plus 800,000 options exercisable at $0.30 within four years, and 400,000 performance rights.
Western Mines, which has a market capitalisation of $13.88 million, expects the transaction to be completed within five days.
Managing Director Caedmon Marriott says this is a strategic transaction for the company, as it is believed to be “significantly value accretive”.
“It also opens up future project funding opportunities through the re-sale of a royalty investment group,” Marriott adds.
“Whilst these conversations have commenced there is no guarantee any transaction will eventuate.”
The Mulga Tank Project comprises four exploration licence applications covering the Minigwal Greenstone Belt, 190km east-northeast of Kalgoorlie.
Western Mines Group is a mineral explorer focused on the discovery and development of gold and nickel sulphide deposits across a portfolio of prospective projects in major mineral belts of Western Australia.
Write to Aaliyah Rogan at Mining.com.au
Images: Western Mines
