1st Feb 2016 10:37
LONDON (Alliance News) - Strategic Minerals PLC on Monday said it has pulled out of an agreement to buy the rest of the company behind the Tatu coal project in New Zealand and has struck a deal to buy a stake in a company holding rights to Australian nickel assets.
Strategic Minerals said it had decided against exercising its option to increase its holding in King Country Mining Ltd, in which it bought a 51% stake in March last year, but decided against exercising this for a series of reasons.
It said further testing on the project would have taken considerable further spending commitments and it had attempted to get an extension to the option. However, the pair were not able to reach an agreement on extending the deadline and Strategic Minerals said coal prices look set to be depressed in New Zealand for the next couple of years, which hit the project economics.
The termination of the agreement means Strategic Minerals will have to transfer the shares it owns in King Country back to its former owner.
In a separate statement, Strategic Minerals has signed an agreement to acquire up to 50% of Central Australian Rare Earths Pty Ltd, a subsidiary of Australia-based Rarus Ltd, which owns an agreement to buy tenements with nickel sulphide and rare earth element potential in Western Australia and the country's Northern Territory.
Strategic Minerals will have the right to buy up to 50% of the company for AUD380,000.
"We believe that nickel and rare earths have good medium to long-term market fundamentals and this bottom of the market acquisition broadens the company's exposure at the right time in the commodity cycle," said John Peters, the managing director of Strategic Minerals.
"In addition, we believe that the CARE tenements represent an immediate, highly prospective mineral exploration opportunity in an emerging nickel sulphide province that could potentially result in a significant increase in company value if exploration success is achieved," he added.
Shares in the company were down 39% to 0.1555 pence on Monday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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