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- Middle Island Resources (MDI) is selling its Sandstone Gold Project in WA’s East Murchison Mineral Field to fellow ASX-listed Aurumin (AUN) for $12 million
- Aurumin will pay for the project in a 50/50 mix of cash and scrip — effectively giving Middle Island an 18.5 per cent stake in Aurumin once the transaction is complete
- Middle Island say this equity ensures it will retain a significant indirect interest in the upside potential of the Sandstone project
- The company now plans to shift its focus to its wholly owned Barkly copper-gold super project in the Northern Territory
- Shares in Middle Island are up 4.17 per cent to 10 cents each at 12:47 pm AEDT, while Aurumin shares are grey at 20 cents each
Gold explorer Middle Island Resources (MDI) is selling its Sandstone Gold Project in WA’s East Murchison Mineral Field to fellow ASX-listed Aurumin (AUN) for $12 million.
Aurumin will pay $6 million in cash for the project, with the remaining $6 million to be paid in AUN shares — effectively giving Middle Island an 18.5 per cent stake in Aurumin once the transaction is complete.
Middle Island said this equity holding in Aurumin ensures that it will retain a significant indirect interest in the upside potential of the Sandstone project, which Middle Island first bought for $2.5 million back in 2016. Middle Island will also gain an indirect interest in Aurumin’s other gold operations.
Middle Island Chair Peter Thomas said Aurumin has exploration ground near Sandstone that could deliver supplemental mill feed or potentially cornerstone a larger project in the future.
He said as such, the prospect of near-term cashflow with the potential for “significant upside” was one of the reasons Middle Island considered the Sandstone deal to be fair and reasonable.
“This transaction will significantly deliver into Middle Island’s long-standing strategy to achieve a regional consolidation of gold assets around the Sandstone gold plant,” Mr Thomas said.
“It also brings new personnel, fresh ideas, and a new investor base to drive the Sandstone Gold Project.”
In the meantime, Middle Island will shift its focus to its wholly owned Barkly copper-gold super project in the Northern Territory.
Middle Island Executive Director Brad Marwood said the recent drilling at the Barkly project has confirmed the “excellent prospectivity” of the region.
The Sandstone sale timeline
Aurumin has entered a $5 million convertible note and received commitments from private investors for a $2.5 million share placement to help fund the deal. Along with a planned entitlement offer to raise another $5 million, this means the company has ticked of some of the financing requirements necessary for the Sandstone purchase to go ahead.
All new shares issued under the placement and entitlement offer will be priced at 20 cents each.
The two companies then have up until February 2022 to either satisfy or waive other conditions under the purchase agreement, meaning if all goes according to plan, the transaction should be finalised before the end of February.
Middle Island to justify its operations
While Middle Island said its core focus will now be on the Barkly project, the company also told investors the market operator had given it six months to prove that this project is sufficient enough to warrant an ongoing listing on the ASX.
If the project is deemed insufficient to justify public trading, Middle Island shares will be suspended until the company re-complies with some key ASX listing rules.
The company is yet to specify how it plans to justify its ex-Sandstone operations when the time comes.
Shares in Middle Island were up 4.17 per cent to 10 cents each at 12:47 pm AEDT. At the same time, Aurumin shares were grey at 20 cents each.
