Power Metal Resources PLC (AIM: POW) has finalized an agreement to sell its 49.9% interest in New Ballarat Gold Corporation (NBGC) to its partner, Red Rock Resources, in a transaction valued at up to £1.5 million.
The company has disclosed to its investors that it signed a heads-of-terms agreement for the conditional sale of NBGC. This entity holds exploration rights in both the Victoria Goldfields of Australia and South Australia.
The payment structure includes an initial sum of £250,000, followed by another £250,000 after two months, and an additional £250,000 after nine months. Future payments are conditional and linked to the achievement of certain project milestones.
Power Metal’s CEO, Sean Wade, commented that this deal is conducive to consolidating ownership of NBGC under a single entity, which he views as the most effective structure for its continued development. He explained that this is also a part of Power Metal’s strategy to streamline its portfolio, transforming its NBGC interest into a balance sheet investment holding and generating more cash inflow.
Wade remarked, “This is the fourth transaction Power Metal has executed in various forms over the past two years, collectively enhancing the company’s working capital and overall balance sheet strength.”
He further stated, “This sale will enable Power Metal to more effectively allocate its managerial, operational, and financial resources to its retained high-value business interests and new ventures.”
Power Metal will maintain a 0.75% gross production royalty on the exploration interests. Additionally, the company retains rights concerning any potential acquisition of exploration licenses that may be relinquished or where expenditure commitments are not fulfilled.
