AUS
NZ
UK
CA
USA
IND
Summary
- Platina Resources has completed a key step for finalising the sale of Skaergaard Project, with Greenland Government approving the transfer of its Skaergaard exploration licences to Major Precious Metals.
- With deal completion, Platina will receive CAD 0.5 million in cash and 55 million Major shares, along with a right to a board seat in Major. Platina will become a significant shareholder in Major Precious Metals.
- PGM plans to use additional funds to realise other opportunities.
Australia-based Platina Resources Limited (ASX: PGM) has announced a significant milestone concerning the sale of its wholly owned Skaergaard palladium and gold project, located on the east coast of Greenland. In June this year, the Company had signed a cash and share deal with Canadian based exploration company Major Precious Metals Corp (CSE:SIZE), previously known as Eastern Zinc Corporation.
In a significant update on 2 September 2020, the Company reported that the Greenland Government has given a go-ahead for the transfer of its Skaergaard Exploration Licences, EL2007/01 and EL2012/25, to Major Precious Metals.
Post the market update, PGM seems to have garnered ample market and media attention, with its stock closing the day at AUD 0.051 after surging 15.909 per cent compared to its last close. The Company has a market capitalisation of AUD 17.78 million and its stock has delivered a return of more than 144 per cent in the year-to-date period, as of 1 September 2020.
Do Read: Platina Resources Releases Investor Presentation, Updating on Project Portfolio
Platina Closer to Realising Over AUD 27Mn in Value
The government approval brings Platina closer to realising more than AUD 27 million in value from the project sale. Once finalised, the Company will get CAD 0.5 million in cash or AUD 0.52 million, in addition to 55 million shares in Major Precious Metals. These shares based on the last traded price of CAD 0.47c per share represents a further CAD 25.8 million or AUD 26.8 million in value for PGM shareholders.
Moreover, Platina will become a significant shareholder in Major Precious Metals and has the right to appoint a board member. Meanwhile, Major will become a palladium focused exploration and development company and look to expand its portfolio of palladium assets.
It is to be noted that similar to gold prices, palladium prices have skyrocketed in the pandemic-stricken year 2020. Consequently, these are among the most sought-after metals right now.
Platina Managing Director Corey Nolan highlighted that the transaction signifies a win-win outcome. The transaction completion will enable PGM shareholders to share in the project’s prospective value increase while giving the Company access to new funds to pursue other possibilities.
Recently, Platina Resources announced “Going for Gold” as a strategic move to focus on building a gold portfolio in proven Australian provinces amid the escalated international travel and lockdown restrictions. Moreover, the renewed focus is in line with record gold prices this year.
For Detailed Discussion: Going for Gold: Platina Resources' Strategic Shift Towards Expanding Australian Gold Footprint
What’s Next?
The transaction completion is now only subject to final confirmatory due diligence and regulatory approvals in Canada.
Major Precious Metals has planned a site visit during September 2020 and is striving to realise value out of the project. It is also busy working towards the preparation of a Canadian NI43-101 resource estimate and several other value-adding work programs.
In the June market update, PGM had highlighted that Major Precious holds financial and technical resources required to advance the project, expected to boost its value. The Skaergaard project requires a significant capital investment for keeping the licences in good standing as well as advancing the project through the drilling and feasibility stages. Major Precious Metals’ exploration and geological team in the northern hemisphere and cash resources will be highly crucial in the Skaergaard project development.
Good Read: Platina Resources Signs Multi-Million Deal with Eastern Zinc to Sell Skaergaard Project
Lens on Skaergaard Project
The Skaergaard Project is believed to host one of the largest palladium resources outside of Russia and South Africa, along with one of the largest undeveloped gold deposits, globally.
Early in May 2020, Platina had announced to have received a helping hand from the Greenland government for the project, with the Mineral Licence and Safety Authority advising towards the renewal of the exploration licence (EL2007/01) for a further three-year period until 31 December 2022.
Related: Platina Resources Gets Helping Hand from Greenland Government to Advance Skaergaard Project
Acknowledging the challenging pandemic environment, the Greenland government had also approved a temporary adjustment and removed all the 2020 tenement expenditure obligations on all mining projects in the country.
