Moho Resources has agreed to sell its Empress Springs Project in Western Queensland for $1.258 million, including deferred payments and a retained royalty, as it refocuses its portfolio.
- Sale of Empress Springs Project to Qld Aus Graphite Pty Ltd for $1.258 million
- Initial cash payment of $258,000 with $1 million deferred payment secured by guarantor
- Moho retains a 1% net smelter royalty on the project post-sale
- Transaction aligns with Moho’s strategy to streamline portfolio and improve balance sheet
- Completion contingent on regulatory approvals and due diligence
Strategic Divestment to Strengthen Balance Sheet
Moho Resources Limited (ASX: MOH) has taken a decisive step in reshaping its asset portfolio by entering into a binding Sale and Purchase Agreement with Qld Aus Graphite Pty Ltd (QAG) for the Empress Springs Project in Western Queensland. The deal, valued at approximately $1.258 million, reflects Moho’s intent to streamline its operations and focus on more financially viable opportunities.
The transaction structure includes an upfront cash payment of $258,000 upon completion, followed by a deferred payment of $1 million due 12 months later. Notably, this deferred payment is secured by QAG’s parent company, providing Moho with a degree of financial assurance. Additionally, Moho will retain a 1% net smelter royalty (NSR) on the project, ensuring ongoing revenue participation should the project advance to production.
Background on Empress Springs and Moho’s Portfolio Review
Empress Springs has been a significant part of Moho’s exploration efforts since its ASX listing in 2018. The project comprises multiple exploration permits, including EPM25208, EPM25209, and EPM25210, with Moho having earned up to a 70% interest through a joint venture with IGO. Despite the initial promise, the remote location and high exploration costs have made the project less aligned with Moho’s evolving financial strategy.
Moho’s management cited the administrative burden and resource allocation challenges associated with Empress Springs as key factors motivating the sale. By divesting this asset, Moho aims to free up capital and management focus to pursue new projects that better fit its growth ambitions and shareholder value objectives.
Conditions and Next Steps
The sale is subject to several conditions precedent, including regulatory consents under the joint venture agreement, the execution of a formal royalty deed, and QAG’s satisfactory completion of legal, technical, financial, and operational due diligence. Completion is expected within 10 days after these conditions are met or waived.
Moho’s Chairman, Peter Christie, emphasized that the transaction aligns with the company’s broader strategy of realising value from existing assets while maintaining exposure to future upside through the royalty arrangement. This approach balances immediate financial benefits with potential long-term returns.
Market Implications and Outlook
For investors, the sale provides a clear boost to Moho’s balance sheet, enhancing liquidity and flexibility. The retained royalty interest also offers a low-risk avenue for future income should Empress Springs progress under new ownership. However, the success of this strategy will depend on Moho’s ability to identify and develop new projects that can deliver stronger returns.
As the company moves forward, market watchers will be keen to see how Moho reallocates capital and whether it can capitalize on emerging opportunities in the Australian exploration sector.
Bottom Line?
Moho’s Empress Springs sale marks a pivotal portfolio reset, setting the stage for fresh exploration ventures.
Questions in the middle?
- What new projects will Moho prioritize with the enhanced balance sheet?
- How soon will the deferred payment from QAG be realized, and what risks remain?
- What are the prospects and terms of the 1% net smelter royalty in the context of Empress Springs’ development?