PERTH (miningweekly.com) – ASX-listed Poseidon Nickel has struck a deal with fellow listed GTI Resources to sell its Windarra gold rights, in Western Australia, for A$3-million.
Poseidon said on Friday that it would transfer the Windarra gold rights in exchange for an initial $25 000 cash payment, allowing GTI Resources to conduct a due diligence study.
On exercising the option before the end of February, GTI would pay Poseidon a further A$975 000. Another A$1-million would be payable by June 28, and a final payment of A$1-million was expected on the termination of the Poseidon State Act.
Furthermore, GTI would pay a 1% gold royalty to Poseidon on any new gold discovery on the Windarra leases, and any new gold discovery would be subject to a joint venture agreement between the parties, with Poseidon to be free-carried to bankable feasibility study level, and owning 20% of the project.
Poseidon would retain full ownership of any new nickel deposits discovered on the Windarra leases.
“As no work can proceed on the treatment of gold tailings at Windarra until the State Act is terminated, we believe this agreement represents fair value as it provides a cash injection in a soft nickel market,” said Poseidon chairperson Chris Indermaur.
The State Act dates back to 1971 and covers the historic Mt Windarra nickel mine. Terminating the State Act, which can only be done by an Act of Parliament, is expected to allow for the development of the gold tailings project under the more flexible Mining Act.
Indermaur said on Friday that the company was progressing the termination of the State Act, with the hopes of concluding this late this year.
GTI, meanwhile, told shareholders that the option over the gold tailings operation would allow the company to transition to gold producer.
GTI intended to build a relocatable gold tailings treatment plant to recover gold and other minerals located in the three tailings dams, which contain a total mineral resource of 183 000 oz of gold.