ASX listed explorer Kalamazoo Resources Limited (ASX: KZR) inked the mining property sale and purchase agreement with Adaman Resources to sell its Murchison located Snake Well Gold Project for $7.0 million.
The report read that the all-cash consideration of $7.0 million is payable over the term of 24 months and is secured across the project. The company intends to utilize the sale proceeds for the funding of exploration and drilling activities to be undertaken at two recently acquired projects, the Wattle Gully Gold Project and the Pilbara Gold Project. However, the sale is subject to regulatory approvals, including to the consent of Minister if required under the Mining Act.
Kalamazoo’s Chairman, Mr. Luke Reinehr stated that this agreement outlines the ‘excellent results’ at the time this mining property sale and purchase agreement has been entered. He added that Kalamazoo further vision the opportunity to establish an on-going relationship with Adaman.
Once the transaction goes through, Kalamazoo commits to pay the sum of $625,000 to the previous owner of the Snake Well Gold Project, Atlas Iron Limited (ASX: AGO). The payment is reported to be in the full settlement of an outstanding gold royalty that Kalamazoo owes to Atlas.
The Snake Well sale comes after the acquisition of entire Wattle Gully Gold Project in June this year along with the surrounding 288 square kilometers of Castlemaine Goldfield in Victoria. The Company’s Exploration Licence (EL006679) and application (EL006752) includes major structures interpreted to be gold-rich areas. Kalamazoo’s recently acquired Castlemaine Goldfield is positioned as one of the richest goldfields in Australia. It has produced approximately 5.6 million ounces of gold across its life with minimal exploration activities undertaken in the past ten years.
On executing the term sheet, Adaman Resources had already paid $150,000 out of the total sales consideration payable of $7.0 million. Moreover, Kalamazoo expects to receive the next installment of $1,350,000 by the scheduled date of 14 January 2019.
As per the company’s information, the Net Smelter Royalty of 2.5% has been retained by Kalamazoo on the value of all base metals recovered and mined from the tenements. The term sheet also includes a provision where the parties may agree for Adaman to provide up to $4.0 million of drilling services for Kalamazoo’s Wattle Gully Gold Project on commercial arms’ length terms with any amounts used deducted from the final payment installments.
With this update, Kalamazoo Resources’ stock traded flat on ASX. However, 5,500 KZR shares changed hand as on 27 December 2018. The stock last traded at $0.099 with a market capitalization of $8.86 million.
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