PERTH (miningweekly.com) – ASX-listed gold miner Blackham Resources has struck a A$10-million deal with fellow-listed Salt Lake Potash to sell its Lake Way tenements, in Western Australia, cancel its brine royalty and provide certain water rights.

The two companies have been cooperating on their respective projects in the Wiluna/Lake Way region for the past 18 months, with Salt Lake progressing a bankable feasibility study for a sulphate of potash (SoP) operation.

Salt Lake on Tuesday told shareholders that the company had identified specific Blackham assets which could provide synergies for the Lake Way SoP project, as well as material value to the company.

Under the terms of the agreement, Salt Lake would pay A$10-million in cash, comprising a A$3-million non-refundable deposit and A$7-million payable to Blackham at the completion, which will occur this quarter.

Blackham will retain the gold mining and exploration rights at the tenements, with Salt Lake having priority in respect of certain cleared areas. Blackham’s gold rights will also extend to the Williamson and Carroll & Prior areas, with Blackham expected to start mining the Williamson pit in the current quarter.

Blackham will provide Salt Lake with access to up to 2 GL/y of groundwater from a combination of the gold miner’s existing bore fields and would assist Salt Lake to find new sources of groundwater on the Lake Way tenements and other tenements owned by Blackham.

Blackham has also granted Salt Lake an option to purchase its Southern Borefield and associated infrastructure for an additional A$3-million, with Salt Lake required to give notice by the end of December of its intention to exercise the option.

Meanwhile, the brine royalty being cancelled under the agreement would have entitled Blackham to a 4% royalty over future brine production of SoP from the Lake Way tenements, with the royalty to be cancelled with effect from the end of June 2020.

Salt Lake CEO Tony Swiericzuk on Tuesday said that the transaction would provide Salt Lake with significant benefits to the Lake Way project and further supported the rapid progress towards first production.

“The acquisition will provide material value through capital and operating savings to Salt Lake Potash and also significantly de-risk the Lake Way project by providing ownership of tenements and further access to key infrastructure assets, including water and power.”

Salt Lake will raise A$7.4-million through a share placement to Fidelity International, to fund the acquisition. The placement of some 10.58-million shares will be conducted under the company’s existing placement capacity, and will be completed early in August.

Meanwhile, Blackham has reported a slight decline in gold production for the fourth quarter ended June, with 12 045 oz produced, compared with the 15 296 oz in the previous quarter.

For the full year, Blackham produced 65 406 oz of gold.

Gold sales for the fourth quarter declined from 15 130 oz to 11 478 oz, with full-year sales reported at 64 919 oz.

Blackham noted on Tuesday that gold production for the June quarter was down due to the toll treatment of Northern Star Resources’ ore, and due to lower mined and milled grade.

Mining at the Wiluna and Matilda operations are to be scaled back in the September quarter, as strip ratios reduce and consistent high-grade ore becomes available to feed the processing plant. Mining at the Williamson openpit will also start in the quarter.