Copper and battery metals mining and exploration company Galileo Resources has entered into an agreement to sell its wholly owned subsidiary Virgo Business Solutions to ASX-listed Sandfire Resources subsidiary Metal Exploration Capital.

Virgo owns copper prospecting licences in Botswana and the deal includes a $3-million upfront payment and a future contingent success payment of between $20-million and $80-million, depending on the amount of contained copper viewed in the first qualifying ore reserve declared at the project.

The payment, if triggered, will be payable in cash within 30 days of the ore reserve announcement.

The $3-million upfront consideration includes $1.5-million payable with respect to the sale shares and the repayment, discharge and release of related loans. A further $1.5-million will be made payable by the purchase to the seller guarantor as a parent guarantee fee.

A success payment will be triggered if a first qualifying ore reserve containing at least 400 000 t is declared. This payment also depends on the success of future exploration activity.

The Galileo board advises shareholders that the success payment is dependent on the success of future exploration and, therefore, is not guaranteed as the prospecting licences have no defined mineral resource estimate. 

“From Galileo’s point of view, this transaction makes strategic sense as our highly prospective portfolio and our people resources are primarily located in Zambia and Zimbabwe, so we are better equipped to focus on and advance projects there.

“The structure of the transaction provides for consideration now and a significant future success payment if our belief in the potential of the prospecting licences is realised,” Galileo chairperson Colin Bird says.

Once the agreement has been concluded, Galileo will receive and use the aggregate upfront cash consideration towards investment in the company’s principal projects in Zambia and Zimbabwe.

The long stop date for the meeting of the agreement conditions is September 15, the agreement is governed by and construed by the laws of Botswana, and Galileo and Metal Capital have each been given customary representations and warranties for an agreement of this nature.