Australian Vanadium Ltd (ASX:AVL) has signed an option agreement with Mining Green Metals Limited that will see MGM take a 100% stake in AVL’s non-core Coates Project and Nowthanna Hill Project tenements in Western Australia, application and associated mining information.
The sale will allow AVL to focus on its Australian Vanadium Project at Gabanintha, with the acquisition a win-win for both companies as AVL shareholders will receive 6.5 million fully paid ordinary shares in MGM when it lists later this year.
“With AVL’s primary focus being the development of the Australian Vanadium Project at Gabanintha, the option agreement offers AVL shareholders continued exposure to exploration success at the Coates and Nowthanna Hill projects in a focused exploration company,” AVL managing director Vincent Algar said.
“AVL will retain an interest in the projects and be able to benefit from the suite of potential minerals at Coates which are currently in high and growing demand and the future potential from the Nowthanna Hill Project.”
Details of the agreement
MGM will take hold of the Coates Project near Wundowie, 80 kilometres northeast of Perth in WA, and the Nowthanna Hill Uranium Project.
Coates holds exploration potential for nickel, base metals, gold and platinum group elements (PGEs) and covers similar mafic-ultramafic rocks sequences that host Chalice Mining’s nickel-copper-PGE Julimar project 29 kilometres to the NNW of Coates.
The Nowthanna Hill Project has a granted mining licence and mineral resource estimate. It is south and southeast of AVL’s Australian Vanadium Project and is contiguous with the Toro Energy Ltd Nowthanna uranium deposit.
The option will provide the following benefits to AVL and its shareholders:
AVL to receive 6.5 million fully paid ordinary shares in MGM;
A 0.75% net smelter return royalty from the value of the minerals mined (Coates Project); and
A cash payment of A$190,000.
The tenements included in the option are: E70/4924-I (Coates Project), E70/5588 (Coates Project), ELA 70/5589 (upon grant – Coates Project) and M51/771 (Nowthanna Hill Project).
In order to exercise the option, MGM must give written notice to AVL within 12 months of the execution date. MGM will conduct its due diligence, which it will need to complete within two months of the option exercise notice. It must also be admitted to the ASX for the acquisition to take place.
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