Broken Hill Prospecting to ring-fence funds from equity interest sale for development of rare earth project

Broken Hill Prospecting Ltd (ASX:BPL) will ring-fence funds from the sale of its equity interests in the Thackaringa Cobalt Project for use in post-exploration development of the La Paz Rare Earth Project in Arizona, USA.

In an update to shareholders, chairman Creagh OConnor said an initial analysis of the La Paz project by the companys technical team had interpreted a significant increase in resources and grades.

He said geological interpretation of historical data coupled with the sampling undertaken by BPL in October 2019 had indicated a meaningful uplift in grades from the base case, which was being worked on.

Cobalt exposure retained

BPL continues to retain its exposure to cobalt, and the Thackaringa project, through the royalty based on the PFS, which has been valued at a range of around $43 million to $48 million revenue over the current life of mine, as well as BPLs base metals exploration rights in the permit area.

OConnor said: “The execution and sale of BPLs remaining project interest in Thackaringa solidifies what has been a significant value uplift to BPLs shareholders, from the decision to capitalise the project by way of COBs spin off, to the sale completed in the last few days.

“With the retention of BPLs royalty stream, BPLs shareholders are well-positioned to benefit from future life of mine, and COB is well-positioned to drive the development of the Thakaringa project.”

He said the companys balance sheet and cash position continued to strengthen.

“Following BPLs execution of its agreement with COB and allotment of the early renounceable rights applications received, the company is in a relatively healthy cash position with $505,000 cash and a further potential maximum cash available to the company of $2.507 million.”

Early rights offer support

The chairman said the directors appreciated the early support shareholders had shown during the renounceable rights offer underway, with early applications received totalling $283,952 from new shares being issued soon after the original close date of Thursday, January 9, 2020.

All up, the company can raise up to a maximum of $2.5 million, which will be applied primarily to the La Paz Rare Earth Project.

Offer is “attractive”

He said: “With a market capitalisation of $3 million and a cash equivalent backing of $6 million, the pricing of the current offer is attractive on a cash backing basis alone without the addition of the La Paz Rare Earth Project, the royalty value of the Thackaringa Project and the Murray Basin mineral sands exploration portfolio.

“The cash equivalRead More – Source

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