Australian Vanadium (AVL) has entered into an option agreement with Mining Green Metals (MGM) to divest its Coates and Nowthanna Hill projects in Western Australia.
Located 29km from Chalice Mining’s Julimar project, Coates is prospective for nickel-copper-platinum group elements (PGEs). Nowthanna Hill is located near the company’s flagship Australian Vanadium project and is prospective for uranium.
MGM will have the option to acquire 100 per cent of Coates and Nowthanna Hill, which in turn will see Australian Vanadium receive 6.5 million fully paid ordinary shares in MGM, a 0.75 per cent net smelter return royalty from the value of the minerals mined, and $190,000 in cash.
The option may be exercised within 12 months of the agreement commencement date. The option will lapse if is not exercised within this period.
If MGM exercises the option, the acquisition will be subject to a series of conditions that need to be satisfied within two months of the exercise date.
MGM must advise Australian Vanadium that it has completed its due diligence on the projects’ tenements and application. MGM must also receive ASX-listing approval for its shares to be admitted on the ASX, a condition subject only to the completion of the acquisition.
Australian Vanadium must also either obtain shareholder approval, if necessary, or receive written advice from the ASX that shareholder approval is not required.
The agreement comes as Australian Vanadium continues to develop its namesake project, which was further validated by the release of a bankable feasibility study in April.
This demonstrated an expected mine life of 25 years for the project, along with an estimated $175 million in annual EBITDA (earnings before interest, taxes, depreciation and amortisation) for a total EBITDA of $4.4 billion.
“With AVL’s primary focus being the development of the Australian Vanadium project at Gabanintha, the option agreement offers AVL shareholders continued exposure to exploration success at the Coates and Nowthanna Hill projects in a focused exploration company,” Australian Vanadium managing director Vincent Algar said.
“AVL will retain an interest in the projects and be able to benefit from the suite of potential minerals at Coates, which are currently in high and growing demand, and the future potential from the Nowthanna Hill project.”