Australia-based minerals company Aura Energy (AEE) has signed a C$4.5-million (A$4.8-million) funding term sheet for the creation of a joint venture (JV) vehicle with TSX-listed Chilean Metals for Aura’s gold, base- and battery-metal tenements in Mauritania.
The deal, which is subject to due diligence, is nonbinding and includes Aura’s Tasiast South tenements, which lie over 435 km2 and are in a highly prospective area lying on two lightly explored mineralised greenstone belts.
The areas lie along strike from Canada’s Kinross’ 20-million-ounce Tasiast gold mine, where the miner has recently announced that it will expand gold production to 530 000 oz/y.
The transaction, which remains subject to due diligence, will see Aura progressively vend its Mauritanian gold and base-metal licences into a JV vehicle (PubCo) with Chilean Metals contributing four scheduled cash payments, totalling C$4.5-million before October, 2021. The third and fourth Chilean payments will be at their election.
Assuming Chilean Metals invests C$4.5-million in cash into PubCo, Aura will own 50% of PubCo and Chilean will own 50%. Aura will also receive one-million shares in Chilean Metals as part of the transaction.
Chilean Metals may source the required funding from its own corporate sources or individual investors with the payment schedule by Chilean Metals into the new vehicle being C$1.5-million to be paid before August 31, with additional payments in increments of C$1-million due on January 30, 2021, June 1, 2021 and October 1, 2021, respectively.
However, AEE states that given the non-binding nature of this agreement, there can be no assurance at this stage that the transaction will proceed.
Aura Energy executive chairperson Peter Reeve says this substantial funding package from a group of seasoned resource investors/developers will help reveal their true potential. “With the Tasiast gold mine (400 000 oz/y) on the same belt just north of our project, the potential for multimillion-ounce discoveries is, in the eyes of our technical people, very conceivable.”
He adds that the “excellent” base metal indications also revealed on these properties, particularly nickel and high-grade cobalt, also highlight the broader potential of these properties on a similar basis as the Kalgoorlie region in Western Australia where significant gold and base metal discoveries have been made in similar Archean greenstone settings.
“Chilean Metal’s understanding of what it takes to enable mineral discovery and their connection to important gold investment sources will be important ingredients in this transaction. The current global economic environment is driving the gold price and provides the perfect environment for a separate vehicle to hold these strongly undervalued assets,” notes Reeve.
Aura and Chilean Metals will seek to finalise a definitive agreement for the transaction no later than August 31.