PERTH (miningweekly.com) – ASX-listed Centrex Metals has entered into a purchase agreement with fellow-listed Sheffield Resources to acquire the Oxley potash project, in Western Australia, in a transaction valued at A$2.5-million.

Centrex reported on Monday that it would pay an upfront A$1-million, which would be refundable if the conditions precedent were not met, and a further A$1.5-million on the satisfaction of these conditions.

The completion of the transaction was subject to Foreign Investment Review Board approval, as well as any necessary government consent and the execution of deeds of assumption with third parties before the end of May.

Centrex CEO Ben Hammond said that upon completion of the transaction, Centrex would undertake a review of all possible processing routes for Oxley, and would start bench scale testwork for the preferred options.

“The Oxley project has a number of synergies with Centrex’s existing bulk commodities business. The infrastructure scales, logistics distance and options are very similar to Wilgerup, where we have a lot of existing knowledge.”

Hammond said that the main contaminant in the rock was iron, in which Centrex had significant mineral processing experience in removing, adding that Oxley represented a good strategic fit for both the business and the company’s networks in China and India.

The Oxley project comprises six adjacent exploration licences that cover an unconventional hard-rock style of potash mineralisation.

Sheffield MD Bruce McQuitty commented that the sale of the Oxley project was consistent with the company’s strategy to unlock value from its noncore assets.

McQuitty noted that proceeds from the sale would provide Sheffield with additional funds prior to the release of a prefeasibility study on its Thunderbird mineral sands project, and the restart of nickel exploration in the Fraser Range, in Western Australia.