Liberty Gold (TSX: LGD) is cleaning up its portfolio to focus on its most promising asset, with the company this morning announcing that it is offloading its Goldstrike Project in southern Utah to Heliostar Metals (TSXV: HSTR) for total consideration of US$72.5 million.
The deal provides the precious metals developer with non-dilutive capital over a five year period. Proceeds from the transaction are earmarked for the advancement of its flagship Black Pine project in Idaho, which is currently moving through the feasibility and permitting stages.
Under the terms of the transaction, Liberty Gold will receive an initial $10 million in cash and approximately $2.5 million in Heliostar common shares upon closing. The remaining $60 million is tied to a series of milestones over the next five years, including cash payments of $10 million at the 12- and 18-month marks, and larger sums triggered by infrastructure developments or the release of a feasibility study. If those final two triggers are not met, the payments come due five years post-closing.
For Liberty Gold CEO Jon Gilligan, the sale is about streamlining. By selling Goldstrike, the company avoids the need to tap equity markets and dilute existing shareholders to fund the expensive long-lead procurement required to get Black Pine up and running.
“The structure delivers near-term funding while maintaining exposure to additional value as Goldstrike advances,” Gilligan said in a statement.
The buyer, Heliostar Metals, gains a development-ready project in a mining-friendly jurisdiction. Goldstrike currently holds a mineral resource estimate consisting of 925,000 ounces of gold in the indicated category at 0.50 g/t, and 296,000 ounces of gold inferred at 0.47 g/t. The project is a past-producing heap leach mine that produced up to 209,000 ounces of gold from 1988 through 1994.
The sale has already received the green light from Liberty Gold’s board and is expected to close within 30 days, pending regulatory approval from the TSX Venture Exchange. Canaccord Genuity Corp. and 3L Capital Inc. served as financial advisors on the deal.
With Goldstrike off the books, Liberty Gold’s singular focus is now Black Pine, a past-producing oxide gold system that the company believes can be revived into a modern, large-scale open-pit operation.
Liberty Gold last traded at $0.96 on the TSX.
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