IGO Restructures West Kimberley Joint Venture; Deal Awaits Shareholders’ Consent

Independence Group NL (ASX: IGO) restructured the West Kimberley Joint Venture in order to accelerate the exploration in the West Kimberley. The Joint Venture partner of the company Buxton Resources Limited (ASX: BUX) struck three further Commercial binding agreements with the wholly owned subsidiary of Independence Group NL- Independence Newsearch Pty Ltd.

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Merlin Project Tenements Deal

The milestones of the deals inked by BUX and IGO with each other are as mentioned below:

• On 01 October 2019, both the companies with their respective subsidiaries - Independence Newsearch Pty Ltd and Alexander Creek Pty Ltd (a wholly owned subsidiary of BUX) entered into an acquisition and joint venture agreement for the Merlin Project.
• Under the agreement, both the parties decided that Alexander Creek Pty Ltd, as a holder of the Merlin Project Tenements agrees to sell and Independence Newsearch Pty Ltd agrees to buy, a 51% interest in the Merlin Project Tenements.

(Source: Company’s Report)

BUX would be released from spending subscription funds decided under the Subscription Agreement (dated 28 November 2018) between Buxton, Alexander Creek Pty Ltd, IGO and Independence Newsearch Pty Ltd on the Merlin Project Tenements.

• The transaction would end the current option of Independence Newsearch Pty Ltd to enter into a farm and joint venture agreement in respect of the Merlin Project Tenements (Option), which was granted by Alexander Creek Pty Ltd under the Subscription agreement announced by BUX on 29 November 2018.
• BUX has been released from its obligation to spend $2,967,862 on the Merlin Project Tenements.
• The Merlin Joint Venture agreement features Alexander Creek Pty Ltd selling a 51 per cent stake in the Merlin Project Tenements to Independence Newsearch Pty Ltd, and a 51/49 JV forming on that basis.
• Independence Newsearch Pty Ltd has a right to sole fund $5,000,000 of joint venture expenditure to take its interest in the Merlin Project Tenements, and the Merlin JVA to 80% and Alexander Creek Pty Ltd would be carried free till the completion of a feasibility study.

Despite the slated agreements, they are still subject to the shareholder approval under the Listing Rule 10.1.

Once Independence Newsearch Pty Ltd acquires the 51 per cent stake there will be a 51/49 joint venture formed between both the subsidiaries of IGO and BUX, and Independence Newsearch Pty Ltd will hold the right to sole $5,000,000 on joint venture operations over 4 years to earn a further 29 per cent stake into the Merlin Project Tenements.

• Upon reaching the 80/20 JV, Alexander Creek Pty Ltd would be free carried till the completion of a feasibility study.
• Upon completion of the feasibility study, both Alexander Creek Pty Ltd and Independence Newsearch Pty Ltd would be required to contribute to the Joint Venture expenditure in proportion to their respective interests, and Independence Newsearch Pty Ltd would be the manager.

NWC Project Deal

On 01 October 2019, all the above-mentioned parties also struck a Joint Venture agreement for the NWC Project Tenements.

The highlights of the deal between IGO and BUX are as below:

• Independence Newsearch Pty Ltd would acquire 80 per cent interest for $1,000,000 cash initially, with three further cash payments of $500,000 each as deferred payments conditional upon the satisfaction of milestones.
• Independence Newsearch Pty Ltd will get 100 per cent of its interests in the operational field equipment for $275,000 cash upon completion of the deal.
• Buxton would receive $500,000 upon the satisfaction of each of the three deferred payment milestones.

The decided milestones for the 80 per cent stake sale of BUX are as mentioned below:

• The first time IGO or its subsidiaries identifies that they intersected (on a grade-thickness basis) an intersection greater than or equal to 20 per cent m of nickel equivalent at the NWC project.
• The first time IGO or its subsidiaries identifies any category such as Indicated, Inferred, etc., which falls under JORC compliant.

Apart from the deal, IGO also notified the market about the completion of a ground electromagnetic surveys and a reconnaissance Air Core drilling program at the Quick Shears Project.

The Air Core drilling provided new geological and lithogeochemical (handheld XRF) data on the extensive areas of Ruins Dolerite and Marboo Formation rocks, present immediately northwest and along strike from Buxton’s Merlin prospect.

The drilling program unfolded an exciting identification of disseminated Nickel-Copper sulphides in outcrop at Quick Shears.

The company also completed a large, belt-scale airborne EM survey over 1,900 km² of WKJV and the analysis of results from a large spectrum EM is at an early stage; however, the company has already identified numerous promising EM conductors on multiple tenements.

Currently, the assessment of anomaly, ranking and target generation, is underway, which is anticipated by BUX to be completed over the next quarter.

IGO plans for a busy field season for the WKJV in 2020, which will include mapping, surface geochemistry, ground EM, drilling and downhole electromagnetic survey.

Share Price Actions:

IGO moved in a strong uptrend from the level of $1.980 (low in January 2016) to reach a recent high of $6.640 (high in September 2019), which underpinned the growth of over 235 per cent.

As per its close on 3 October 2019, the stock delivered a return of 47.71 per cent over the last five years and a return of 29.32 per cent over the last one year.

The YTD return delivered by IGO stands at 68.87 per cent, while the return delivered by the stock over the last six months is at 24.59 per cent.

Also Read: IGO and COB at the Diggers and Dealers 2019 Showcase

While, BUX delivered a return of -47.78 per cent over the last five years and a return of -37.33 per cent over the last one year.

The YTD returns delivered by BUX stand at -27.69 per cent, while the return delivered by the stock over the last six months is of -6.00 per cent.

Unlike IGO, BUX is moving in a continuous downtrend from the level of $0.640 (high in November 2012) to the present level of $0.094, which in turn, marks a downfall of over 85 per cent.

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