Cazaly Resources Ltd will pay a total of $6 million to West Perth-based Carbine Resources Ltd to exit a farm in and joint venture deal.
Carbine said the mutually agreed decision is in light of the challenging economic environment and after Carbine completed a review of its assets and future funding requirements.
Under the termination deal over the West Kalgoorlie JV agreement, Cazaly has agreed to pay Carbine a $40 per ounce gold royalty on the first 75,000 ounces of production, valued at $3 million.
Cazaly will also pay an additional $3 million when gold production reaches 140,000oz.
The announcement is pasted below:
Carbine Resources Ltd ("Carbine") and Cazaly Resources Ltd (ASX: CAZ) have mutually agreed to terminate the West Kalgoorlie Farm in and Joint Venture Agreement which was entered into in May 2007. This decision has been made in light of the challenging economic environment at present and after the Board of Carbine completed a review of its assets and their future funding requirements.
As part of the termination agreement, Cazaly have agreed to pay Carbine a $40/oz gold royalty on the first 75,000oz of production and an additional $3 million cash payment when gold production reaches 140,000oz. The royalty payments relate only to tenements within the JV agreement that contain published mineral resources and include the tenement that contains the recently discovered Backflip prospect.
Carbine will lodge caveats over these specified tenements and will have no further funding obligations.
The Company maintains 100% ownership of the Red Dam gold project, which contains a mineral resource of 1.87Mt at 2.45 g/t for 147,400oz of gold, with 683,000t at 2.44 g/t Au in the indicated category and 1,187,000t at 2.45 g/t Au in the inferred category. Red Dam is favourably located only 45km north-west of Kalgoorlie within close proximity of several operating processing plants. The mineralisation is open along strike, down dip and has been identified in adjoining geochemically anomalous areas.