Middle Island sells African project but retains upside exposure
Middle Island Resources has entered a deal with Canadian-based Tajiri Resources to sell the last of its West African gold interests.
The company announced this week it had executed a heads of agreement with Tajiri to sell its 100%-owned Reo project in Burkina Faso.
The deal earns Middle Island up to US$355,000 in a series of cash payments and 8% of the fully diluted capital of TSX-V listed Tajiri. Middle Island has also negotiated a 2% net smelter return on any production from Reo.
The deal completes a West African exit for Middle Island, which is now focusing on furthering its significant exploration success at the Sandstone gold project in W.A.
A deep drill hole at the Sandstone Two Mile Hill prospect in the December quarter produced an eye popping 508.3 metre intercept grading 1.38 g/t gold, including 160 metres at 2.31 g/t gold. The company has also enjoyed success with some shallow targets that could provide early feed for the mill.
Middle Island Managing Director, Rick Yeates, said the Tajiri deal would preserve some upside for shareholders in the West African assets, as well as add exposure to the Canadian explorer’s other projects.
He said, “The transaction structure allows Middle Island shareholders to retain a significant indirect interest in the upside potential of the Reo project via the Tajiri equity and royalty components.
“The full equity component, which will represent some 8% of Tajiri’s issued capital on a fully diluted, post-issue basis, also offers shareholders considerable exposure to Tajiri’s highly prospective gold project interests in Guyana, South America.”
Under the deal, Middle Island will receive US$35,000 from Tajiri for a three-month exclusive window to conduct due diligence on the Reo project. On signing a formal option to purchase agreement, Tajiri will pay US$150,000 and issue Middle Island with 2.5m shares. Another US$150,000 and 2.5m shares is payable on the exercise of the option, which has an 18-month term.
In the meantime, Middle Island is racing ahead with its work program at Sandstone following a placement just before Christmas that raised $1.9 million.
Large diameter diamond core drilling is being undertaken at the Two Mile Hill Deeps prospect to generate additional material for testwork.
Resource definition drilling of the upper 450 metres of the deposit is also taking place.
Middle Island Resources (MDI)
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