Mineral sands explorer Sheffield Resources is selling its wholly owned Eneabba project to West Perth-based Image Resources for $24 million in cash.
Sheffield told the ASX this morning it had selected the mineral sands junior Image as a buyer after seeking expressions of interest for the project during the September quarter.
Image says it will fund the purchase with existing cash reserves and, upon compeltion of the purchase, will effectively increase its overall mineral resources tonnage by 234 per cent and more than double total contained tonnes of total heavy minerals.
The tenements are located in the Eneabba mining district about 275 kilometres north of Perth and are thought to hold 6.3 million tonnes of contained total heavy minerals.
The Eneabba tenements contains eight exploration licences, three mining leases and one retention licence.
Sheffield says it had been evaluating an unconfirmed amount of non-binding proposals over the quarter.
Proceeds from the sale will to go towards paying a $10 million post-final investment decision equity contribution required as part of Sheffield’s Kimberley Mineral Sands joint venture with Yansteel.
A venture established to host and develop Sheffield’s flagship Thunderbird minerals sands asset.
According to Image, the sale is conditional to obtaining necessary regulatory approval to transfer the retention licence and approval from an unnamed third-party royalty holder to the transaction.
Three of the mining licences will be subject to Foreign Investment Review Board approval.
The parties say they have agreed to push ahead to completion of the sale “as soon as the necessary conditions precedent are satisfied or waived" with the deal set to close in early 2022.
Sheffield executive chair Bruce Griffin said he was pleased to divest the asset.
“Sheffield is very pleased to have realised meaningful value for our non-core Eneabba Project, consistent with Sheffield’s strategy of focusing on our core Thunderbird asset,” he said in an ASX release.
“It is particularly pleasing to be able to divest Eneabba to Image given the strong alignment of these assets to their growth strategy.”
“Sheffield’s divestment decision coincides positively with Image’s desire to identify and secure potential development projects outside of its current portfolio, as a critical component of its growth strategy,” he said.
Sheffield shares are up 4.35 per cent to trade at 36 cents, while Image shares are down 4.65 per cent to trade at 20 cents.