West Perth- based explorer Sheffield Resources will sell its Oxley potash project, near Geraldton, to South Australian Centrex Metals for $2.5 million.
West Perth-based explorer Sheffield Resources will sell its Oxley potash project, near Geraldton, to South Australian Centrex Metals for $2.5 million.
Payment will be in two parts, with an upfront cash deposit of $1 million and a latter payment of $1.5 million on completion of government consents and Foreign Investment Review Board approval.
Sheffield has also received a $1.5 million refund through the research and development tax incentive program, which the company said would contribute to its cash reserves.
Sheffield managing director Bruce McQuitty said the sale of the Oxley potash tenements was consistent with the company’s strategy of unlocking value from non-core assets.
“The proceeds from the sale of the potash project will provide Sheffield with cash at bank of approximately $8 million, a strong position for Sheffield prior to the release of our Thunderbird pre-feasibility study and the recommencement of nickel exploration in the Fraser Range,” he said.
Sheffield has 2,000 square kilometres of tenure in the Fraser region, with further operations at Derby and Eneabba.
The Oxley project is around 125 kilometres from Geraldton port, 70km from a major gas pipeline and 40km from a major power transmission line.
The proximity to the port is likely to provide a major freight advantage in sales to Asia.
Centrex said that the gas pipeline could enable ammonia production near the Oxley site, with chief executive Ben Hammond adding that the project had synergies with the company’s bulk commodities business.
“The infrastructure scales, logistics distances and options are very similar to Wilgerup where we have a lot of existing knowledge,” Mr Hammond said.
“The main contaminant in the rock is iron which Centrex has significant mineral processing experience in removing, albeit from the opposing product perspective.
“This project represents a good strategic fit with both our business and our networks in China and India.”
Centrex was steady at 9.2 cents per share at the time of writing, while Sheffield was down 1.3 per cent to 78 cents per share.
