Nex Metals Explorations has agreed to sell its 20% interest in the Arika Joint Venture for $2.5 million cash plus shares in Arika Resources, refocusing on its Kookynie Tailings Project and new opportunities in Egypt’s Eastern Desert.
- Sale of 20% interest in Arika JV for $2.5 million cash plus Arika shares
- Proceeds to fund Kookynie Tailings Project development and WA gold exploration
- Retains 100% ownership of Kookynie Tailings Project advancing towards production
- Transaction subject to shareholder and regulatory approvals
- Strategic expansion into Egypt’s underexplored Eastern Desert gold district
Nex Metals Streamlines Portfolio with Strategic Divestment
Nex Metals Explorations Ltd (ASX – NME) has announced a significant shift in its asset portfolio by agreeing to divest its 20% interest in the Arika Joint Venture, which encompasses the Yundamindra and Kookynie Gold Projects. The deal, struck with Arika Resources Limited (ASX – ARI), will see Nex Metals receive $2.5 million in cash alongside a substantial shareholding in Arika, valued between $1.9 million and $2.3 million based on current prices. This transaction is designed to be value-accretive for Nex Metals shareholders and is subject to customary shareholder and regulatory approvals.
Funding Future Growth and Exploration
The net proceeds from the divestment will be strategically reinvested into advancing the Kookynie Tailings Project, where Nex Metals retains 100% ownership. This project is progressing towards production under a memorandum of understanding with the Wangkatja Tjungula Aboriginal Corporation, highlighting a collaborative approach to development. Additionally, the funds will support broader exploration activities across Western Australia’s goldfields, reinforcing Nex Metals’ commitment to its core competency in gold exploration and development.
Maintaining Exposure to Arika JV Upside
While Nex Metals is exiting direct ownership of the Arika JV interest, it will maintain exposure to the projects’ upside through its newly acquired shareholding in Arika Resources, which represents approximately 5% of Arika’s issued capital. The deal also includes deferred consideration shares contingent on Arika achieving significant exploration milestones, potentially increasing Nex Metals’ stake further. This structure allows Nex Metals to benefit from future exploration successes without the capital commitments of joint venture participation.
Expanding Horizons in Egypt’s Eastern Desert
Beyond Western Australia, Nex Metals is actively pursuing opportunities in Egypt’s Eastern Desert, a region noted for its underexplored gold potential. The company is finalising its foothold with the North Henai concession, aiming to apply capital-light process improvements to existing small-scale gold production. This strategic move signals Nex Metals’ ambition to diversify its portfolio geographically while leveraging its expertise in gold exploration and development.
Regulatory and Shareholder Considerations
The Australian Securities Exchange has classified this divestment as a disposal of Nex Metals’ main undertaking, triggering the requirement for shareholder approval under ASX Listing Rule 11.2. Nex Metals must also demonstrate to ASX that it maintains sufficient operational activity and financial health to continue its listing, with a six-month window to meet these conditions post-agreement. The company remains confident in fulfilling these obligations, supported by its ongoing projects and strategic initiatives.
Bottom Line?
Nex Metals’ divestment marks a pivotal step towards a leaner, more focused gold exploration strategy with promising growth avenues ahead.
Questions in the middle?
- Will shareholder approval be secured smoothly given the significance of the divestment?
- How will Arika Resources’ exploration results impact the value of the deferred consideration shares?
- What timeline and capital requirements will Nex Metals face in advancing its Egypt Eastern Desert projects?