Hammer Metals To Boost Cash Reserves with $20 Million Stake Sale in Copper Project

Hammer Metals Ltd (ASX: HMX) has executed a pivotal binding agreement, selling a 70% interest in three sub-blocks of its Mount Hope copper project to Carnaby Resources Limited (ASX: CNB) for a substantial sum of $20 million.

This strategic move fortifies Hammer’s financial standing and provides the impetus for intensified exploration for copper in Queensland.

Key Highlights of the Agreement

Hammer will receive a $20 million cash injection through staged payments upon achieving specific milestones.

The transaction begins with an initial $4 million cash influx, followed by subsequent payouts contingent upon mining decisions and project development milestones.

A Research and Development Tax Refund of $1.2 million would further boost the cash position.

With this deal, Hammer becomes Carnaby’s largest shareholder, securing a 5.6% stake in Carnaby shares issued at $0.55 per share, subject to escrow arrangements.

Bolstered by the financial influx, Hammer is poised to escalate exploration drilling activities at Mount Isa, to expand its copper resource portfolio.

Transaction Overview

  • Carnaby acquires an initial 51% interest in the sub-blocks for $4 million in cash and $5 million in escrowed Carnaby shares ($0.55 per share).
  • Upon commencement of mining operations at the existing Mount Hope pits, Carnaby’s ownership stake escalates to 70%, with an additional $5 million cash payment to Hammer.
  • Further development leading to a new mine within the sub-blocks prompts an additional $6 million cash infusion to Hammer, while Carnaby maintains a 70% interest.
  • Under the agreement, Carnaby will bear the expenses associated with advancing the project to production, effectively “free-carrying” Hammer until the new mine becomes operational.

Profits derived from ore mined within existing open pits will be distributed based on the 70%/30% ownership structure between Carnaby and Hammer, respectively.

Anticipated News Flow

In April and May, Hammer is slated to release a series of exploration results, including drilling programs at various projects such as:

  • Yandal Project (Reverse Circulation) Mount Isa East Joint Venture
  • Shadow South/Mount Philp – Copper/Gold Mount Isa Project
  • Hardway – Copper/REE Hardway Diamond Drilling Program Mascotte RC Drilling Program (and potentially others)

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