Key Highlights

  • Breakthrough Minerals has entered a binding term sheet to sell 100% of Errolls Exploration Pty Ltd to Xenora Minerals for 6 million XRA shares.
  • The consideration is valued at $1.2 million at a deemed issue price of $0.20 per share and is subject to a 12-month voluntary escrow.
  • The company intends to seek Shareholder approval for an in-specie distribution of the XRA shares to eligible shareholders.
  • Breakthrough says the sale allows it to concentrate resources on its North Queensland Copper-Gold Project.

Breakthrough Minerals Limited (ASX:BTM) has entered into a binding term sheet to divest its Errolls Gold Project in the Murchison region of Western Australia. The transaction is a sale of all shares in the Subsidiary that holds the project, to Xenora Minerals Ltd (ASX:XRA). Breakthrough is seeking to return the consideration to its shareholders, while the company’s operational focus shifts toward its North Queensland Copper-Gold Project.

Transaction Terms and Consideration

Under the agreement, Xenora will issue 6 million fully paid ordinary shares to Breakthrough at a deemed issue price of $0.20 each, giving a deemed transaction value of $1.2 million. The shares will be subject to a voluntary Escrow period of 12 months from issue. The escrow applies whether the shares are retained by Breakthrough or distributed to its shareholders. Completion is scheduled for five Business days after the conditions precedent are satisfied or waived, or on another date agreed by the parties.

Completion depends on several conditions. Xenora must complete legal and technical due diligence, and the conditions of its proposed agreement with FireFly Metals for the adjoining Limestone Well Project must be satisfied or waived. The transaction also requires regulatory and shareholder approvals, including Xenora shareholder approval under Listing Rule 7.1 for the issue of the consideration shares. The current term sheet includes an end date of 60 days after execution, unless extended by written agreement.

Proposed In-Specie Distribution

Breakthrough’s present intention is to distribute the XRA consideration shares to eligible shareholders through an in-specie distribution. That step is subject to completion of the transaction, shareholder approval and final legal, tax and regulatory requirements. No Record Date has been set, and the company has said the timetable and distribution mechanics will be announced once the relevant conditions are sufficiently advanced. Shareholders are advised to obtain their own tax advice, and the company has stated there is no certainty that the transaction or distribution will proceed in the form described.

The Errolls project sits within a consolidated landholding of approximately 115 km² in the Barrambie Greenstone Belt when combined with the Limestone Well Project. Xenora plans to fund exploration on the combined landholding through a proposed $5 million Capital raising, which would provide Breakthrough shareholders with exposure to exploration of the Errolls gold mineralisation through their XRA holdings. Breakthrough has described the Errolls project as a quality gold asset with historical grades, but says its clear strategic priority is advancing its North Queensland portfolio.

Project Background and North Queensland Focus

Errolls has reported historical production of approximately 6,197 oz of gold at an average grade of 19.01 g/t Au. Breakthrough notes that historical drilling has averaged only about 34 metres in depth, and that potential extensions along strike and at depth remain inadequately tested. Historical intercepts cited by the company include 22 metres at 7.46 g/t Au from surface, 11 metres at 6.88 g/t Au from 14 metres and 20 metres at 2.74 g/t Au from 14 metres. Historical metallurgical testwork reported gold recoveries of up to 98.4%.

Breakthrough’s flagship North Queensland Copper-Gold Project is host to a Global Mineral Resource Estimate of 18.8 Mt at 1.07% CuEq for 200 kt of CuEq metal. The company says initial drilling at that project has identified high-grade extensions outside the existing resource base. By divesting Errolls, the company intends to direct operational resources and exploration capital toward that asset.

Closing Perspective

The transaction converts a non-core gold asset into a share consideration valued at $1.2 million under the deemed issue price. Whether shareholders receive that value depends on the completion of the sale, the approval of the distribution and the progress of Xenora’s proposed capital raising and exploration plans. Future announcements on the distribution record date and Xenora’s exploration program will show how the consideration is realised and how the Errolls project develops within the Barrambie Greenstone Belt.