Mineral explorer, View Resources (VRE) is set to sell its 30% stake in Carnilya Hill for $25 million to joint venture partner, nickel miner Mincor Resources (MCR).
Purchased by View in 2003, the Carnilya Hill nickel mine is located 25 km north east of Kambalda, Western Australia.
The deal will see View become completely debt free enabling the company to focus on the Bronzewing Gold Project as full production is achieved at an annualised 120,000 ounces.
"This is a very good outcome for View, particularly as the gold price continues to climb to record heights with our company completely unhedged,' managing director Tim Gooch said.
"We are looking to focus the future growth of the company on our 100% owned Bronzewing gold mine, which produced 10,300 oz in December 2007," he said.
Under the terms of the sale, View will receive $22.5 million cash and up to $2.5 million in future nickel royalties.
In addition, Mincor will fund $1 million of exploration expenditure on the Bronzewing tenements after View agreed to grant Mincor a fully-vested 70% interest in the nickel rights over all of View's Bronzewing tenements.
Tim Gooch added that undertaking nickel exploration on the Bronzewing tenements "opens another potentially exciting avenue for future value."
View said it will immediately pay off the remaining debt facility provided by its bankers of $14 million, becoming totally debt free.
It will use the additional funds to scale up Bronzewing exploration programme as well as provide contingency and working capital for future growth.
View bought the Bronzewing gold operation from Newmont Yandal Operations Pty Ltd ("Newmont") in 2004, for a total cash consideration of $9 million.
Bronzewing is located in the Eastern Goldfields of Western Australia and approximately 400 km north of the regional goldfields centre of Kalgoorlie.
"Not only is Bronzewing in the middle of the very productive Yandal Gold belt, it is also a neighbour to some of Western Australia's most successful nickel mines," Gooch said.
The acquisition will result in Mincor holding a 100% interest in Carnilya Hill.
Mincor's managing director David Moore said the project will generate its first revenue from the end of the month.
"We expect this acquisition to provide an excellent financial return on the cash outlay, based on current reserves."
In October 2005 an agreement was reached for Mincor Resources to farm into the Carnilya Hill nickel project.
Under the terms of the agreement, Mincor were required to spend $2.5 million on nickel exploration over a three year period in order to earn a 70% interest in the joint venture.
Mincor immediately implemented an aggressive exploration drill programme and within 12 months had earned their equity interest and also defined an indicated resource at Carnilya Hill containing 16,100 tonnes of contained nickel.
View Resources fell 1.5 cents to 23.5 cents as at 11:14AM Sydney time.
Shares in MCR were also down, falling 4 cents to $4.02 at 11:15AM Sydney time.
