Middle Island Resources has finalised the transaction for the divestment of the Reo Gold Project in Burkina Faso, West Africa. A formal Option to Purchase Agreement with Tajiri Resources Limited (Tajiri) has been executed, which provides Tajiri with the option to acquire 100% of Middle island’s interest.
Tajiri has provided formal notice that it will enter into the 18-month exclusive option period and now has 15 days to pay a US$150,000 option fee and issue 5,000,000 Tajiri shares to Middle Island. The up-front issue of all the Tajiri shares is an amendment to the terms contained in the HOA, which contemplated a staged issue of shares.
During the Option term Tajiri must pay all expenses associated with maintaining the Reo Project permits in accordance with Burkinabe law.
Should Tajiri elect to exercise the Option, it will pay a further US$150,000 to Middle Island. If Tajiri has not exercised the Option within 12 months, it will be required to pay US$50,000 to Middle Island as a non-refundable advance on the Option exercise cash consideration, with the balance of US$100,000 payable if the Option is exercised during the remaining six months of the Option term. If the Option is exercised within the first 12 months the full US$150,000 is payable on exercise.
If the Option is exercised by Tajiri, Middle Island will retain a 2% net smelter return (NSR) royalty on any minerals derived from the Reo project. Tajiri has the right to acquire that royalty from Middle Island for US$5 million.
If the Option is not exercised by Tajiri, Middle Island will retain all consideration already paid to Middle Island and it will continue to own its 100% interest in the Reo Project.
Middle Island Managing Director, Rick Yeates commented “This divestment is in line with Middle Island’s strategy to focus on developing the Sandstone gold precinct in Western Australia into a thriving gold hub, processing local deposits through the Company’s 100%-owned Sandstone mill.”