Sandfire Resources has reached an agreement to buy joint venture partner Talisman Mining’s 30 per cent stake in the Springfield copper-gold project in the Doolgunna region of Western Australia for $72 million.
The deal also includes Talisman’s 27 per cent stake in the smaller Halloween West tenement.
Sandfire will acquire 100 per cent of Talisman subsidiary, Talisman A, which holds the JV interests in the Springfield and Halloween West projects.
The Springfield JV tenement is adjacent to Sandfire’s Doolgunna project, which includes the DeGrussa copper mine. The acquisition of Talisman’s interests gives Sandfire 100 per cent access to the Monty copper mine, an acquisition that adds significantly to the company’s presence in the Bryah Basin.
In addition to paying the full amount from its $188 million cash reserves, Sandfire will also provide an ongoing 1 per cent net smelter royalty on future Springfield JV discoveries. Completion of the deal is subject to conditions, including satisfactory completion of all due diligence, approval from the Taurus Mining Finance Fund (with whom Talisman has a facility agreement in place), and shareholder approval from Talisman at a company general meeting scheduled for July.
Sandfire’s relationship with Talisman in the region has been ongoing since they first entered into a farm-in deal in the region in December 2013, followed by the JV agreement after the Monty project was discovered in 2015.
Sandfire managing director and chief executive officer Karl Simich said the transaction allowed Talisman to crystallise significant upfront value for their share of the Springfield project on attractive terms.
From Sandfire’s perspective, he said the transaction would simplify and streamline the development of Monty and any further exploration going forward.
“As the owner of the only operating base metals processing plant in the region, our strategic focus is on consolidating growth opportunities in the district which allow us to leverage this infrastructure and further strengthen our dominant footprint across the Bryah Basin, which now totals over 6200 square kilometres,” Simich said.
Talisman’s board has unanimously supported the proposed transaction, with chairman Jeremy Kirkwood saying the deal represented strong value realisation for the company.
“Subject to Talisman shareholder approval and completion, Talisman shareholders are expected to receive a substantial proportion of the cash consideration of the transaction (after retirement of the TMFF debt facility balance), while retaining an investment in a well-capitalised company with exploration and development assets across the Sinclair nickel project in Western Australia and the Lachlan Project in New South Wales, as well as the ongoing Springfield royalty,” Kirkwood said.