PERTH (miningweekly.com) –  The share price of ASX-listed Ark Mines tumbled more than 15% on Monday, after the company announced the sale of its Mt Porter and Frances Creek tenements, in the Northern Territory.

Ark told shareholders that it had inked a binding term sheet with Territory Iron to divest of the Pine Creek assets for A$4-million, which will be used to repay a A$3.75-million loan facility from Chan Investments.

Ark had initially planned to process ore from the Mt Porter operation through a toll treatment agreement with Crocodile Gold Australia Operations, however, delays in getting the mine management plan approved saw the Crocodile toll treatment agreement terminated, to be replaced with a processing agreement with NT Mining Operations, which is now controlled by Kirkland Lake Gold.

However, further delays were encountered in negotiating an agreement with NT Mining’s then operator Newmarket Gold, which resulted in significantly higher processing costs for the Mt Porter operation, which necessitated significant modifications to the planned mining operations.

Ark said on Monday that just prior to the start of mining at Mt Porter, processing costs were again increased to uneconomic levels, which resulted in the company deciding the only viable strategy was to establish its own processing plant.

The commitment that Ark had secured to fund the plant could not be closed.

Instead, the miner has focused its activities on producing gold as soon as reasonably practicable, with the company focusing on its Old Pirate project.

However, with Chan holding security over all of the company’s assets, it was necessary for Ark to either repay Chan or procure its consent to release security so the Old Pirate project could be funded.

Ark earlier this year secured a commitment that would have both repaid Chan in full and provided all initial funding to bring the Old Pirate project into production, however, this commitment was withdrawn, and Ark said on Monday that it has encountered resistance from other potential funders that were precluded from, or not prepared to contribute funds to paying out or reducing the Chan debt.

As a result, Ark has been forced to sell the Pink Creek assets in order to repay the Chan debts, allowing the company to focus all its resources on the Old Pirate gold project, and the Tanami region.

Ark shares were trading at a low of 4c a share on Monday, down from an opening price of 5.9c a share.