Reed plans discounted Comet Vale sale

Struggling miner Reed Resources has agreed to sell its Comet Vale gold project to a private bidder for $2 million, about a third of the price offered by Crest Minerals in its terminated bid for the project last year.

Reed told the market it had accepted an offer to sell its subsidiary Sand Queen Gold Mines, the holder of the Comet Vale project near Kalgoorlie.

Reed will receive a non-refundable deposit of $100,000 and $1 million on completion of the transfer of Sand Queen shares, plus up to a further $900,000 in instalments. 

Completion of the sale is expected to occur in the March 2014 quarter.

Reed last year entered into a memorandum of understanding to sell the Comet Vale project, plus a 1 per cent zinc royalty over MacPherson Resources' Nimbus project, for $6 million to Crest Minerals.

However Crest failed to secure the backing of investors for the purchase, despite "significant efforts" to win support.

Reed managing director Chris Reed said the sale of the Comet Vale project was consistent with the company's strategy of realising value for its non-core assets.

Reed's Meekatharra gold project was last year placed into administration after a number of operational setbacks, prompting the resignation of then managing director Luke Tonkin.

The company announced $70 million in asset impairments for the 2013 financial year and has since launched a comprehensive review of operations. 

Reed shares were trading 1.9 per cent lower at 5.2 cents at 12:06pm WST.