Capstone started due diligence last month as part of an exclusivity agreement and has now firmed that up into a full earn-out deal that contemplates Capstone spending circa US$10mln to earn up to an 80% interest in the project, after which Alien has the option to contribute on a pro-rata basis.
In the first stage, Capstone will take a 65% stake through a cash payment of US$290,000 to Alien over three years plus US$3.6mln of exploration expenditure.
This stake can rise to 75% through a further cash payment of US$200,000 and funding for a preliminary economic assessment and up to 80% for full funding of the PFS.
Alien said the deal allows for the immediate advancement of the Donovan 2 Copper-Gold project while leaving it free to focus on exploration.
In a statement, Bill Brodie Good, Alien Metals’ chief executive, commented: “This transaction sees the potential for considerable expenditure to be invested into Donovan 2 over the next few years as the project progresses through to feasibility studies.
“Importantly, the transaction is in line with the Company’s model of unlocking value in its project portfolio; with Capstone overseeing exploration at Donovan 2, the Company’s management team can focus its exploration efforts at Hamersley and Elizabeth Hill in Western Australia and commence maiden drilling at Los Campos and San Celso.”
Shares in Alien Metals have been on a tear recently, rising over 1,000% since August on hopes for its exploration portfolio.