Tanami Gold says it will exercise a put option forcing Northern Star Resources to buy a 15 per cent stake in the junior miner’s Central Tanami project for $20 million, after the Bill Beament-led company said it had not reached commercial production at the joint venture mine.
In 2015, Northern Star agreed to take a 25 per cent stake in the project for $20 million, and to move to 60 per cent ownership by sole funding all expenditure to bring the project into production.
Tanami was granted two put options as part of the deal, including the right to sell a 15 per cent stake in the project for $20 million in cash or Northern Star shares if production was not achieved.
“The company has been advised by Northern Star that 'commercial production' (as defined under the joint venture agreement) will not be achieved by 31 July 2018,” Tanami said in a statement to the ASX.
“Furthermore, based on information available to Tanami as at the date of this announcement, it is not presently clear when or, indeed, if commercial production will ultimately be achieved.
“The board is of the opinion that it is in the best interests of the company’s shareholders to exercise the first put option and, accordingly, has resolved that it will take the necessary action to exercise the first put option on or immediately prior to 31 July 2018 in accordance with the terms of the joint venture agreement.”
The second option grants Tanami the right to sell 25 per cent of the project for $32 million in cash or scrip) up to six months after commercial production is achieved.
Shares in Northern Star finished up 2.71 per cent at $7.19 each.
