Platina Resources Limited (ASX:PGM) (FRA:P4R) has completed the A$13.7 million sale of its Skaergaard gold and palladium project in Greenland to Canadian-listed Major Precious Metals Corp (CSE:SIZE) (OTCMKTS:SIZYF) (FRA:3EZ).
Platina has received C$500,000 in cash (A$520,000) and 55 million Major shares, which based on the last traded price of C$0.23 per share, represents a further C$12.65 million (A$13.2 million) in value for Platina shareholders.
Platina will become a major shareholder in Major and has a right to a seat on Major’s board.
Ramp-up gold drive
The funds from the sale will primarily be used to advance its gold projects in Western Australia.
Platina managing director Corey Nolan said: “The deal allows us to ramp-up exploration activities at our Challa Gold Project which lies in-between the prolific Mt Magnet and Sandstone gold districts in Western Australia.”
“In addition to the cash funds, our Major shares can be sold over time to fund our activities, reducing the need to raise new equity and avoiding the dilution of our share capital.
“A large reconnaissance soil geochemistry program has just been completed at Challa to identify potential targets for deeper drilling.
“The company is also reviewing a number of merger and acquisition opportunities to build its gold presence.”
Prospective value increase
Platina shareholders would also be able to participate in Major’s prospective increase in value.
“Major is already working hard to create value from the project, including plans to produce a mineral resource estimate and preliminary economic assessment in accordance with Canadian NI 43-101 standards, and a drilling program for summer 2021,” Nolan added.
“The anticipated outcomes of the studies are expected to be positively impacted by the recent strength and positive price outlooks for palladium and gold.”
Palladium is trading above US$2,400 per ounce after reaching a high of US$2,875 per ounce in February while gold is trading at US$1,786 per ounce following record highs of US$2,067 per ounce in August.
The Skaergaard mineral resource estimate in 2013 used a palladium price of US$560 per ounce and gold price of US$1,400 per ounce.
24-month pooling arrangement
Platina’s shareholding in Major will be subject to a 24-month time-release pooling arrangement.
During this period, the shares may not be transferred, assigned, pledged or otherwise traded.
The shares will be released from the pooling arrangement in four equal tranches, with the first release after six months and each subsequent release occurring every six months thereafter.
Subject to a mandatory four month-period escrow period, which completes on February 28, 2021, there are provisions for accelerated share releases in connection with share price performance, changes in corporate structure or the distribution of the shares to the shareholders of Platina.