Bayan Mining Sells Bayan Springs North to Sun Silver for Up to A$800,000 While Retaining 1% NSR Royalty

Bayan Mining’s Non-Dilutive Capital Strategy and Portfolio Streamlining

The sale of Bayan Springs North marks a deliberate shift by Bayan Mining toward non-dilutive funding approaches that preserve shareholder value while unlocking capital from non-core assets. The transaction provides immediate cash of A$150,000 at closing, with an additional A$150,000 deferred payment due one year later. This staged payment structure balances Bayan’s need for liquidity with portfolio flexibility. As a critical minerals-focused explorer and technology developer operating rare earth and gold-silver projects across California and Nevada, Bayan’s portfolio optimisation is key to efficient capital deployment.

By avoiding equity dilution, Bayan shareholders benefit from retained upside through deferred payments and a production royalty. CEO Nathan Kong highlighted that the deal "unlocks immediate value from a non-core asset while retaining meaningful long-term exposure to exploration success." This enables Bayan to focus capital on advancing its Desert Star Rare Earth Project and proprietary rare earth processing technologies developed in collaboration with the Colorado School of Mines.

Strategically Located Adjacent to Sun Silver’s Maverick Springs Silver Resource

The Bayan Springs North Project consists of 116 lode mining claims managed by the Bureau of Land Management in Nevada, directly adjoining Sun Silver’s Maverick Springs Project. Maverick Springs hosts a JORC (2012) Inferred Mineral Resource of 539 million ounces silver equivalent at 71 g/t silver equivalent, underscoring the district’s significant precious metals endowment. This proximity enhances Bayan Springs North’s potential for sediment-hosted precious metals mineralisation within a well-established mining district.

Bayan’s board acknowledged that although Bayan Springs North is prospective, Sun Silver’s extensive landholdings and strategic focus on Maverick Springs position it better to advance exploration. Consolidating adjacent claims under Sun Silver is expected to create exploration synergies and operational efficiencies unattainable by Bayan alone. Transferring the project to Sun Silver leverages their established resource base and district-wide exploration programs.

Retention of 1.0% Net Smelter Return Royalty Ensures Long-Term Value Participation

Key to the transaction is Bayan’s retention of a 1.0% NSR royalty on all minerals produced from Bayan Springs North, securing a perpetual revenue stream if mining proceeds. This royalty allows Bayan to benefit from future development without further capital investment. While timing and likelihood of production remain uncertain, the royalty reflects confidence in the project’s potential. Sun Silver may repurchase 0.5% of the NSR royalty for a one-time payment of A$2 million, offering Bayan additional non-dilutive funding if exercised.

This layered royalty and buyback option aligns incentives: Bayan gains ongoing production revenue if successful, while limiting exposure if exploration fails. This structure effectively transfers exploration risk to Sun Silver while preserving Bayan’s upside participation, a valuable arrangement in early-stage mining ventures.

Performance-Based Milestone Payment Tied to Significant Silver Equivalent Intercept

The agreement includes a milestone payment of A$500,000, payable in cash or shares at Sun Silver’s discretion, contingent on a continuous drill intercept of at least 20 metres grading 100 g/t silver equivalent within five years of completion. This milestone directly links Bayan’s future cash inflows to exploration success, incentivizing Sun Silver to aggressively pursue drilling targets. The geological threshold represents a substantial economic discovery in a precious metals context.

The five-year timeframe aligns with typical exploration cycles, allowing Sun Silver to leverage its district knowledge. Achieving this milestone would increase total consideration to A$800,000. The milestone’s flexible payment terms provide financial adaptability for both parties and ensure Bayan benefits materially from exploration progress without additional capital commitment.

Bayan Springs South Project Retained, Maintaining Exposure to Carlin Trend Gold

While divesting Bayan Springs North, Bayan retains full ownership of the adjacent Bayan Springs South Project on Nevada’s prolific Carlin Trend, approximately 10 kilometres from Kinross Corporation’s Bald Mountain mine. The project has yielded high-grade surface assays up to 8.25 g/t gold, signaling promising early-stage mineralisation within one of North America’s premier gold belts.

This retention demonstrates Bayan’s ongoing commitment to the Nevada precious metals district, focusing on assets where it can independently drive value. The proximity to a major operating mine validates the district’s gold potential and supports further exploration. Capital freed from the Bayan Springs North sale can be redeployed to advance Bayan Springs South, including drilling to test high-grade targets. This selective portfolio management enables Bayan to concentrate resources on strategically aligned projects.

Completion of Maiden Drilling and Assay Timeline at Desert Star Rare Earth Project

Bayan has completed its initial reverse circulation drilling campaign at the Desert Star Rare Earth Project, totaling 856 metres. Samples have been sent to ALS Laboratories, with assay results anticipated in August or September 2026, subject to lab turnaround. Desert Star is central to Bayan’s critical minerals growth strategy, and this drilling milestone advances project evaluation significantly.

These assay results will provide the first quantitative data on rare earth grades and mineralisation characteristics, serving as a key catalyst for shareholders. The timing of the Bayan Springs North divestment—prior to assay release—reflects management’s intent to strengthen financial flexibility ahead of reporting on this core project. Proceeds from the sale will support ongoing exploration and rare earth processing technology development, positioning Desert Star for accelerated progress.

Advancing Proprietary Rare Earth Processing Technologies

Bayan’s strategy extends beyond exploration to include proprietary rare earth processing technology development, encompassing beneficiation, leaching, and resin-based separation techniques. Developed in partnership with the Colorado School of Mines, these technologies offer a unique competitive edge by targeting high-value stages of the rare earth supply chain. Integrating exploration with processing innovation positions Bayan to capture value across multiple critical minerals value chain segments.

Funds from the Bayan Springs North sale will partly finance these technology advancements, underscoring management’s conviction that processing innovation is vital for shareholder value. CEO Nathan Kong noted the transaction "strengthens our ability to accelerate development of our rare earth portfolio," highlighting capital redeployment toward technology and exploration as a value-accretive strategy.

Transaction Completion and Regulatory Considerations

Completion of the Bayan Springs North sale is expected by 31 August 2026, occurring 10 business days after all conditions precedent are satisfied or waived. The announcement does not specify conditions or regulatory approvals required, though transfer of the 116 lode mining claims likely involves Nevada Bureau of Land Management consent. The binding sale agreement suggests key risks have been addressed.

The rapid completion timeline indicates thorough due diligence and agreement on principal terms. Upon closing, ownership will transfer to Sun Silver Resources LLC, Sun Silver Limited’s wholly owned Nevada subsidiary. Bayan will then be entitled to deferred payments, milestone bonuses, and the NSR royalty as outlined. Investors should watch for confirmation of completion after 31 August 2026.

Focused Capital Allocation to Drive Future Growth

This divestment exemplifies Bayan’s commitment to disciplined portfolio management aimed at maximizing shareholder returns through strategic capital allocation. By generating non-dilutive funding and shedding a non-core asset, Bayan is positioned to accelerate growth in priority areas: rare earth exploration at Desert Star and proprietary processing technology development. The transaction is described as "value-accretive portfolio management," crystallizing value while enhancing financial flexibility.

Proceeds and capital freed from Bayan Springs North will support exploration and technology advancement, creating multiple potential value catalysts including Desert Star assay results, processing milestones, and Bayan Springs South exploration progress. This diversified growth pipeline offers investors exposure to several key developments within a single critical minerals company.