Classic Minerals Seals A$7M Deal to Divest Kat Gap Gold Tenements

Strategic Sale of Kat Gap Tenements

Classic Minerals Limited (ASX: CLZ) has entered into a binding agreement to sell its 100% interest in the Kat Gap gold tenements to Bain Global Resources Pty Ltd for A$7 million. This transaction, announced in December 2024 and detailed in the recent quarterly report, marks a significant shift in Classic's asset portfolio and strategic focus.

The sale includes mining lease M74/249, exploration licence E74/467, miscellaneous licences L74/57 and L74/59, along with all associated mining information and camp equipment. The full purchase price is payable within five business days after all conditions precedent are met, including shareholder approval, ministerial consent, FIRB clearance, and satisfactory due diligence.

Financial and Operational Implications

Classic plans to deploy the proceeds from the sale primarily to retire existing debt and to fund further exploration activities at its Lady Ada and Lady Magdalene gold project areas. Notably, Classic will retain ownership of the Kat Gap processing plant and associated equipment, with intentions to upgrade the facility to accelerate processing capabilities. This move suggests a continued operational presence in the region, albeit with a refined asset base.

The transaction is governed by ASX Listing Rule 11.2, which addresses disposal of a main undertaking. The ASX has indicated that Classic's securities will likely remain quoted for up to six months following the agreement, contingent on Classic demonstrating sufficient ongoing operations and financial health to justify continued listing.

Bain Global Resources and Mega Resources Partnership

Bain Global Resources, associated with Indian mining contractor BGR Mining & Infra Pvt Ltd, aims to develop the Kat Gap gold project into full production. Bain's sister company, Mega Resources Pty Ltd, brings a turnkey mining solution expertise, covering exploration through to production. Their combined experience and resources position them well to advance Kat Gap's development, potentially unlocking value that Classic Minerals has yet to realise.

Quarterly Cash Flow and Financial Position

Classic's December 2024 quarter cash flow report reveals operating cash outflows of A$193,000 against inflows of A$187,000, reflecting ongoing expenditure in exploration and staff costs. The company maintains a modest cash balance of A$4,000 at quarter-end but benefits from substantial unused financing facilities totaling approximately A$18.6 million, providing a buffer for future activities.

The company continues to manage multiple loan facilities, some secured against assets and others unsecured, with varying interest rates and maturity dates. The sale proceeds from Kat Gap are expected to alleviate some of this financial pressure, enhancing Classic's liquidity and capacity to focus on its core projects.

Outlook and Strategic Focus

With the Kat Gap sale pending shareholder and regulatory approvals, Classic Minerals is poised to sharpen its exploration efforts on the Lady Ada and Lady Magdalene projects, which collectively hold inferred and indicated mineral resources exceeding 300,000 ounces of gold. Retaining and upgrading the processing plant signals a commitment to operational efficiency and potential future processing of ore from these sites.

Meanwhile, Bain and Mega's involvement introduces a new dynamic to Kat Gap's development, potentially accelerating its path to production under experienced operators. This divestment and partnership approach reflects a pragmatic strategy by Classic Minerals to optimise its asset portfolio and financial position amid challenging market conditions.