MRG Metals (ASX: MRQ) and the vendors of heavy mineral sands projects in Mozambique have enacted a new sales agreement for the projects that will see MRG taking charge of the assets in the coming days.
A heads of agreement was first inked in April this year between the shareholders of Sofala Resources Pty Ltd and Trophosys Pty Ltd, which are the entities that hold the heavy mineral sands projects.
However, sale negotiations ceased in August after Sofala and Trophosys shareholders failed to agree on the final terms with MRG.
At the time, MRG said it would redirect its focus to seeking new opportunities, while streamlining its existing portfolio.
MRG then entered a trading halt at the end of last month, and while in the halt, it picked up negotiations with Sofala and Trophosys’s shareholders – leading to all parties agreeing to the final contract terms, which would comprise MRG acquiring both Sofala and Trophosys.
Under the revised sales agreement, MRG will pay an upfront consideration of 90 million MRG shares and 90 million options to the vendors, which will be subject to a 12-month voluntary escrow period.
Subsequent milestone payments will amount to 160 million MRG shares and a further 320 million MRG shares. These performance milestone payments will be subject to three-month escrow periods.
Meanwhile, MRG will pay any tax owed to the Mozambique Government from the transfer of the assets.
“It is pleasing of the parties to come back together and reach an in principle agreement on the acquisition of these highly prospective projects in a world-class heavy mineral sands province,” MRG chairman Andrew Van Der Zwan said.
“MRG has reviewed more than 120 projects in pursuit of a company making project and this acquisition has the potential to meet this objective,” he said.
MRG will seek shareholder approval for the project acquisition at am upcoming meeting.
He said he believed the projects have “enormous scale potential” and the revised acquisition terms were a “good outcome” for shareholders.
Heavy mineral sands projects
The heavy mineral sands assets in Mozambique include the Corridor project which is the most advanced of the three assets MGR will acquire.
The project spans 387 square kilometres and previous drilling has unearthed 36m at 5.2% total heavy mineral from surface.
Marao Marruca is the largest asset and encompasses 491sq km of prospective tenements, while Linhuane is the smallest project at 113sq km. Rio Tinto previously drilled Linhuane and uncovered several 10m intersections with grades ranging between 5% total heavy mineral and 25% total heavy mineral.
At midday, shares in MRG were up 25% at $0.005.