Central Australian Phosphate (ASX:CEN) has entered into a binding heads of agreement with Monument Mining (CVE:MMY) to develop its phosphate projects in Arganara, Lucy Creek and Warrabri in the Northern Territory.
Under the joint venture, Monument will invest up to A$8.8 million the phosphate projects to earn up to a 51% participating interest. This will include an upfront cash payment to Central of $1.5 million to reimburse it for past expenditure to earn a 10% interest.
Monument can also make a further investment of $7.3 million in the phosphate projects including a $2.5 million commitment to earn a further 20% participating interest within 12 months; an additional spend of $2.8 million to earn a further 12.5% interest within 36 months and a right to spend an additional $2 million to earn a further 8.5% participating interest within 54 months.
Monument will also have the right of first refusal to enter into offtake sales contracts for Central's share.
Central will also retain control and ownership of all its non phosphate project.
Meanwhile, it has recommended shareholders to take no action regarding the off-market takeover from Rum Jungle Resources (ASX:RUM).
Rum had made a bid for Central offering one share plus A$0.20 in cash for every 20 Central shares.
But Central rejected the offer noting that an independent expert had valued its shares at between $0.028 and $0.042 with a preferred value of $0.035, representing a 62.8% premium to the implied value of the Rum Jungle offer of $0.0215 based on the closing price of Rum Jungle Shares on 12 February 2013.
Monument Mining emerged as a rival bidder offering Central A$0.031 cash per share. But that offer has now been withdrawn in favor of the latest heads agreement.
The Arganara project is about 300 kilometres northeast of Alice Springs and within 130 kilometres of the Darwin/Alice Springs rail line.
Last year, Central had announced a maiden JORC phosphate Inferred Resource of 310 million tonnes at 15% P2O5.
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