Venture Minerals has announced that it has entered into a sale agreement for its wholly owned subsidiary, Venture Iron.
The sale to Goldvalley Brown Stone will include Venture Iron’s Riley Iron Ore Mine, which has been on care and maintenance since 2021.
Venture Minerals engaged Argonaut PCF as advisors to undertake a strategic review of the Riley Iron Ore Mine. The review considered all options, including a potential restart, joint venture or asset sale, with the focus on delivering near-term value for the company.
Venture Minerals said that it carefully considered all options presented and following a competitive process determined that the sale of the mine was the best pathway to unlock the commercial value for its shareholders.
Upon completion under the sale agreement, Venture Minerals will transfer 100 per cent of the shares in Venture Iron to Goldvalley Brown Stone in consideration for $3 million, of which $50,000 has already been paid to Venture Minerals as a deposit.
Following completion, Goldvalley Brown Stone and Venture Minerals are expected to work together to transfer various governmental approvals required for the continued operation of the mine.
Goldvalley Brown Stone will replace Venture Minerals’ bank guarantee ($585,000) currently held by Mineral Resources Tasmania in connection with the mining licence.
The sale agreement contains terms, conditions and warranties that are consistent with agreements of this nature. Goldvalley Brown Stone is expected to fund the consideration through cash reserves.
Argonaut PCF is expected to receive $250,000 in success fees and have the right to subscribe for 25 million options with an exercise price at a 50 per cent premium to Venture Minerals’ 15-day volume weighted average price per share immediately prior to an announcement of the transaction.
Venture Minerals’ Managing Director, Philippa Leggat, said, “The refreshed Board is focussed on creating shareholder value.
“The sale of Riley sees Venture receiving three million dollars and our environmental bond of over half-a-million dollars being returned to the company. This capital injection will be used to advance our high-grade, clay-hosted rare earth project, Jupiter.
“It also frees our team to focus their efforts on advancing Jupiter while eliminating the financial burden of maintaining the Riley Project on care and maintenance. We thank the Tasmanian authorities for working with Venture for all these years.”
Venture Minerals said that the following factors, among others, were considered reasons against the restart of the Riley Iron Ore Mine:
- Additional capital required
- The requirement to hire a team of specialist mining professionals with the capability to successfully execute the project
- The costs associated with hiring additional staff members
- The short mine life of the project being circa 18 months, with the reserve being geologically constrained (no exploration upside)
- The marginal nature of the project economics, as the project is low-grade and requires high handling (low payability with relatively high operating costs)
- The outlook for iron ore pricing not being sufficiently buoyant to validate the degree of associated risk presented by an operation of this nature
In light of these considerations, Venture Minerals said that the Board viewed the opportunity cost of diverting the company’s limited resources away from Jupiter and towards these factors as being detrimental to shareholder value.
Additionally, the recently reconstituted Board believes that there is significant potential to increase shareholder value by focussing the company’s capital and resources on its rare earths’ assets, including the new discovery at Jupiter in Western Australia.
Consequently, Venture Minerals said that it intends to appoint an advisor to run a sale process for its remaining Tasmanian assets, namely the Mt Lindsay and Mt Livingston projects.
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