Platina Resources Limited (ASX:PGM) has struck a multi-million deal for its non-core Skaergaard Palladium and Gold Project in Greenland which will be sold to Canadas Eastern Zinc Corp (CNSX:EZNC).
This will create more than A$8.3 million in value and enable Platina to focus on core projects, including its namesake NSW project, which has potential to become Australias first scandium producer with cobalt, platinum and nickel credits.
Platina will receive C$500,000 cash and C$7.15 million worth of Eastern shares for the project, which hosts one of the worlds largest undeveloped palladium resources with a significant gold endowment.
Shares have been as much as 24% higher this morning to 3.1 cents intra-day, up from 1.1 cents on March 24.
Deal unlocks project value[hhmc]
Platina managing director Corey Nolan said the deal unlocked value in the project which was expected to grow with the help of substantial financial and technical resources.
He said: “The challenge for a company our size is that Skaergaard requires a significant capital investment to keep the licences in good standing and advance the project through the drilling and feasibility stages.
“Eastern has the cash resources and an exploration and geological team based in the northern hemisphere that will be dedicated to developing the project.”
Will be a major Eastern shareholder[hhmc]
Upon completion of the sale, Platina will become a major shareholder in Eastern and will have a right to a board seat.
Following the acquisition of Skaergaard, Eastern plans to change its strategic focus to palladium and expand the number of palladium projects in the portfolio, with a company name change to reflect its strategic direction.
The board of Eastern has a very strong technical capability, including two geologists and a metallurgical engineer, the ideal skill set required to move Skaergaard towards the next phase of development.
Eastern recently completed a C$2 million capital raising and has a potentially large pool of capital available if its in-the-money share warrants were to be exercised at current market prices.
Injection of new funding[hhmc]
Nolan said: “This deal will allow Platina shareholders to share in the projects prospective value increase while providing Platina with an injection of new funding to pursue other opportunities.
“Platina has canvassed some of its major shareholders, who believe that this strategy of disposing a non-core asset is appropriate at this time.”
He also said that Easterns planned sizeable investment in drilling and technical studies would significantly boost the projects potential to be one of the worlds most advanced palladium projects.
The transaction will be subject to final confirmatory due diligence and regulatory approvals in Australia and Greenland.
Greenland Mines Department recently renewed Skaergaards exploration licence for a further three-year period and waived all the 2020 tenement expenditure obligations.
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