Platina Resources Limited (ASX:PGM) is expected to realise up to US$14 million (about $21 million) in cash from the sale of its wholly Platina Scandium Project after signing a binding sale agreement with a wholly owned subsidiary of Rio Tinto Ltd.
The transaction is subject to final regulatory approval including New South Wales Ministerial Consent for the transfer of Exploration Licence 7644.
On closing, Platina will receive US$8 million ash (about $12 million) less a US$1 million warranty retention payment which is repayable by Rio Tinto after 30 months.
Platina may also receive future cash payments totalling US$6 million (about $9 million) subject to Rio Tinto achieving project milestones including granting of a mining lease.
Platina has managed the sale process internally and no corporate advisory or success fees are payable with the transaction.
Platina Managing Director Corey Nolan said the sale unlocked value in the project where Platina had made a considerable investment advancing the project through exploration to the definitive feasibility study stage.
Nolan said: “The transaction with Rio Tinto is congruent with Platina’s strategy of advancing projects along the value chain and monetising when a new combination of technical, market or financial capability is required.
“This enables projects to achieve optimal scale, minimises Platina’s capital outlay and accelerates returns to investors.
“Platina discovered the scandium resource in 2011 as part of an exploration program for platinum and nickel/cobalt.
“Platina has advanced the project over the last 12 years through geological, metallurgical and engineering studies to the point where its value has been recognised by one of the world’s largest and leading natural resource companies.
“This transaction with Rio Tinto will also allow Platina shareholders to benefit from an injection of new funding to advance its extensive gold portfolio and pursue other more advanced project opportunities without shareholder dilution.”
Nolan added the sale of the scandium project finalised the process of transitioning away from the platinum and specialty metal projects and focusing on gold projects where Platina believes it can apply considerable expertise and experience.
The Platina Scandium Project hosts one of the largest and highest-grade scandium deposits in the world and has the potential to be Australia’s first scandium producer.
The deposit has a shallow depth allowing an open-cut mining operation with a processing facility producing 40 tonnes per year of scandium oxide over a 30-year mine life.