Gold-focused producer Karora Resources (TSX: KRR) has announced the sale of its 28% interest in the Dumont nickel project in Quebec to two private funds advised by Waterton Global Resource Management, for a total of up to $48 million.
As consideration for the sale, Karora will receive $10.7 million upon closing - expected by the end of July - which includes $7.4 million from Waterton, and a $3.3-million refund of the company's share of the cash held within the Dumont joint venture. In addition, Karora will retain the right to receive a portion of future proceeds from any downstream sale of the asset - the company will be entitled to 15% of the net proceeds a sale, up to a maximum of $40.2 million.
"The sale of Karora's remaining stake 28% stake in the Dumont project to Waterton is another clear demonstration of our focus on building a mid-tier, profitable gold company," Paul Andre Huet, the company's chairman and CEO, said in a release.
Huet added that the immediate $10.7 million in cash from the sale will be deployed towards increasing the company's gold production as well as its cost reduction initiatives and exploration efforts at its Beta Hunt and Higginsville operations in Western Australia.
Formerly known as RNC Minerals, Karora changed its name in May.
Upon closing of the transaction, the two private funds will own 100% of Magneto Investments, which holds the Dumont project.
According to Huet, Dumont is a shovel-ready and permitted nickel-cobalt-PGM development project, expected to produce an average of 39,000 tonnes nickel over a 30-year mine life at all-in sustaining cash costs (AISCs) of US$3.80 per lb., based on a 2019 feasibility study.
Karora has also announced a plan to consolidate shares in the company on a 4.5:1 basis.
- This article first appeared in our sister publication, Canadian Mining Journal.