Ora Banda Mining looks set to pocket $4.2 million in a three-way deal that includes the sale of four non-core tenements to Beacon Minerals and a new royalty agreement with key investor Hawkes Point.
The company has agreed to sell four of its Lady Ida licences in the Goldfields region of WA to Beacon through its wholly owned subsidiary for $2.5 million while still retaining all non-silver and non-gold mineral rights over the tenements.
The four sites sit around 65km south of Ora Banda’s Davyhurst gold processing plant and have not been included as part of the company’s production target of 100,000 ounces of gold per annum by 2025.
The deal also includes key investor Hawkes Point paying $1.7 million for an increase in the existing royalty payable for the remaining Ora Banda tenements up to 1 per cent from 0.9 per cent. The existing 900,000-ounce cap on the royalty will also be removed. Additionally, Ora Banda has secured a nine-month extension to an existing $11 million unsecured loan from Hawkes Point to the end of September 2024.
Under the terms of the agreement, Hawkes Point will no longer have royalty rights to the sold tenements. The deal remains subject to shareholder approval.
Just last week Ora Banda agreed to sell low-grade gold resources, three existing mining licences, four infrastructure-related licences and two licence applications at Lady Ida to Lamerton Pty Ltd and Geoda Pty Ltd for a cool $10 million. The transaction also includes Hawkes Point waiving any royalties for the sold properties. Ora Banda will retain the rights to all minerals on the tenements apart from gold and silver.
The company will receive $1 million on execution of the sale agreement and the remaining $9 million will be due 30 days later. Upon payment of the full $10 million, the purchasers will be granted the right to explore and mine for gold and silver in the tenements.
The Hawke’s Point funding for $1.7 million is also important for OBM shareholders as it strengthens our balance sheet as well as extending the existing $11 million debt maturity to September 2024 which gives the company improved cash flow flexibility.
Ora Banda Mining managing director Luke Creagh
The company says the two agreements strengthen its balance sheet ahead of a pending decision on the go-ahead for its Riverina underground gold mine just north of its Davyhurst processing plant. A final investment decision on the Riverina operation is expected at its March quarter board meeting, with a view to start mining after March 27. The company will also continue to explore other advanced high-grade targets.
In February, Ora Banda announced it had doubled the underground mineral resource at its Riverina gold system to more than 300,000 gold ounces.
The gold producer also announced a maiden ore reserve for the Riverina system of 73,000 ounces at a solid grade of 4.3 grams per tonne gold with an additional reserve only limited by drilling density at the site.
