Maximus Resources Limited (ASX: MXR) is an ASX listed mining and exploration company having extensive tenement holdings in Western Australia, and focuses on mall suite of strategic commodities.
On 5th April 2019, the company announced that it has reached an agreement, for the sale of the Companyâs 100% owned Burbanks gold treatment plant to Perth based private company Adaman Resources Ltd.
The proceeds from the sale would be around $5.8 million for 100% stake sale of Burbanks adjusted for any major component defects, with a minimum threshold of $100,000, during a short due diligence window. The decision to sell Burbanks, will help the company to seize the opportunities, including the ability to focus on ongoing exploration and project development activities.
A calculation of Gold-in-Circuit (GIC) would be completed at the end of the due diligence period, the total value of which will be paid the Maximus. In the recent quarterly results update, which was announced on 28 March 2019, stated that the value of the GIC to be approximately $1.8 million with gold continuing to be removed from the circuit in an orderly manner.
The company has also secured a milling capacity of 5,000 tonnes per month at Burbanks for a minimum of 2 years, starting from January 2020, with the option to extend the term by agreement. The improved financial capacity of this newly secured milling capacity would ensure, that the company can continue to develop its Spargoville projects and accelerate the approvals process and continue to pursue projects for acquisition.
The detailed schedule of payments prior to, and after the due diligence process is being stated in the sale agreement. The upfront amount of $2 million (Initial & Second Advance) is to be paid upon signing a mortgage over the Burbanks assets and associated tenements. Another $2 million is to be paid upon satisfactory completion of due diligence inspections of the plant and all associated assets by 26 April 2019. The final $1.8 million of the agreement is to be made in 3 deferred instalment payments which are subject to adjustment for any significant defects identified during due diligence, with an agreed threshold value. This last amount is scheduled to be made by the end of June, August and October 2019.
If Adaman chooses to not to proceed with the acquisition after due diligence, in that case, both the parties agree to enter into a Toll Milling Agreement for a minimum of 2 years. In this case, all the payments made become due and payable on the earlier of 30 June 2021 and the end of the toll Agreement term, or such later date if extended. If in case, both the parties are unable to agree to the terms of and execute a toll milling agreement by 30 June 2019, Adaman has the right to terminate the loans comprising the Initial and Second Advance at any time on or after 30 June 2019.
With this announcement, the company has also said that the halt in the trading of the companyâs securities has been uplifted. Earlier, on 2nd April 2019, the company requested the exchange to put the trading on halt until the commencement of trading session, on 4 April 2019 or when this announcement is released to the market, or whichever was earlier.
On 28th March 2019, the company announced its quarterly results update and posted a significant revenue increase.
On the technical front, the stock price rose by 4% and closed at A$0.078 on ASX as on 5th April 2019, compared to the closing of A$0.075 on 1st April 2019. In the last six months, the stock has delivered a negative return of 34.7% while YTD return stands at 1.35%.
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