Havilah Resources (ASX: HAV) has inked a A$14.7 million deal to sell off its Portia and Portia North gold projects to focus on the development of its copper and cobalt assets.
The company revealed to the market it had signed an aagreement with Broken Hill-based Consolidated Mining and Civil (CMC) for the sale of its wholly-owned subsidiary Benagerie Gold, which holds the mining lease containing the Portia gold mine and Portia North copper-gold project in South Australia.
Havilah said the divestment was the first transaction to be implemented as part of the company’s recently announced strategy focusing on its copper and cobalt resources.
“This transaction realises substantial cash flow and allows Havilah to focus more attention on the advancement and ultimate development of the Mutooroo and Kalkaroo copper-cobalt-gold projects,” the company stated.
CMC was already partnered with Havilah in a 50/50 revenue sharing agreement for the development of the Portia gold mine, so Havilah saw the sale transaction as the “next logical step”.
Under the deal, CMC has agreed to pay $13.5 million in staged cash payments over an 18-month period, commencing at the end of June.
In addition, CMC will immediately replace Havilah’s $1.2 million share of the Portia rehabilitation funding obligation, releasing Havilah of any further rehabilitation liabilities.
Havilah will retain a 2% net smelter return (NSR) royalty over the proceeds of all metal and concentrate sales derived from the Benagerie mining lease, plus a 3.25% NSR royalty over all copper sales that exceed the current JORC resource of 101,400 copper metal tonnes.
The company will begin to receive guaranteed payments of $300,000 per quarter from December 2020, if the quarterly royalty payment has not reached that level by then.
Havilah will also continue to receive its current 15% gold revenue stream from the Portia mine until the end of November 2018.
“This transaction realises value from our multi-commodity portfolio and will allow us to increase our focus on Mutooroo and Kalkaroo, the two core projects in our strategy, where the opportunity to add value and generate higher returns is greater,” Havilah chief executive Walter Richards said.
Cobalt-enhanced copper strategy
Last month, Havilah unveiled its “Copper Strategy – Enhanced by Cobalt” presentation, which highlighted the appreciable cobalt resources occurring in all of the company’s sulphide copper projects which it believed placed Havilah as a “future potentially significant, but hitherto unrecognised and under-valued cobalt producer”.
Kalkaroo is one of the largest undeveloped open cast copper-gold deposits in Australia, containing 1.1 million tonnes of copper, 23,200 tonnes of cobalt and 3.1 million ounces of gold.
Mutooroo is a massive, high-grade copper and cobalt sulphide deposit containing 195,000t of copper, 8400t of cobalt and 44,600oz of gold.
Havilah shares jumped up 16.67% to A$0.21 by afternoon trade.