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Burrendong Minerals is picking up Impact Minerals’ NSW gold project ahead of its IPO

Mon 08 Aug 22, 11:56am (AEDT)
A collection of gold nuggets against a black background with one specimen in the foreground
Source: iStock

Key Points

  • Impact Minerals is selling a 75% interest in its NSW Lachlan Ford Belt copper-gold ‘Commonwealth’ project to Burrendong Minerals
  • Burrendong Minerals to list on ASX by July 2023; Impact pivoting to becoming a battery and strategic metals player
  • Impact to receive at least $0.525m for the sale; Impact shareholders given priority to snatch up at least 3m Burrendong shares

Impact Minerals (ASX:IPT) will retain a 25% interest in its Commonwealth copper-gold project in NSW’s Lachlan Ford Belt, with upcoming ASX lister Burrendong Minerals to snatch up 75% for $500,000. 

The deal comes as something of a launch event for Burrendong’s entrance onto the Aussie bourse. Over the next two months, both players will draft a share purchase agreement and joint venture agreement respectively. 

At the end of that two months, Burrendong will pay its first $0.25m to Impact. Once the company lists, it will pay another sum of the same amount, giving Impact $0.5m in cash. 

The JV agreement will see Impact work with Burrendong to continue developing the Commonwealth project as the former retains a 25% interest, allowing it to continue devising revenue and profits from the project. 

The Commonwealth project (including Silica Hill) includes an inferred resource of 88.8Koz of gold and 3.3Moz of silver.

A map locating the Commonwealth project in the Lachlan Ford Belt, NSW
A map locating the Commonwealth project in the Lachlan Ford Belt, NSW

Digging into details 

A complete overview of the deal between Impact and Burrendong includes the following highlights:

  • Burrendong to pay $25k for exclusive two month negotiation

  • Once negotiation is complete, Burrendong pays first $250k

  • Burrendong then has nine months to list on ASX (July 2023)

  • Once listed, Burrendong pays second $250k 

  • Impact shareholders given priority right for up to $3m of Burrendong shares 

There's a number of other clauses shareholders would be wise to keep on the radar as the deal evolves. 

Once a JV is established between the two companies, Burrendong will be responsible for the development of Commonwealth exploration activities until it spends over $5m, or, reaches a Decision to Mine before that time. 

Burrendong, once listed, has the option to buy more of Impact’s 25% retained interest at a price to be negotiated or confirmed by third party valuators. 

If Impact Minerals’ interest in the project drops below 10%, it has the right to convert its take to a net smelter royalty (NSR) of 2%. 

Should Burrendong be successful in bringing the Commonwealth project up to speed faster than Impact (the latter has a lot on its plate,) then Impact will simply retain a royalty fee, if Burrendong begins producing gold.

Ultimately, the move offers Impact shareholders a quicker path to returns from Commonwealth. 

Pivot to battery metals part of the equation 

“The sale of a 75% interest in our project is a good outcome for shareholders [as] it allows us to continue our change in focus to battery and strategic metals projects in WA,” Impact MD Dr. Mike Jones said. 

“The deal also gives Impact considerable exposure to the upside potential of the project into which we have invested considerable capital.” 

Despite a fairly decent deal, investors appear to be overlooking today’s announcement, with shares flat. 

Disclaimer: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Impact Minerals was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.

 

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Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

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