Estrella Resources Agrees $3M Astral Share Deal to Sharpen Timor-Leste Focus
Key Takeaways
- Estrella Resources has signed a binding deal to sell 100% of its Spargoville Nickel Rights to Astral's subsidiary Mandilla Nickel for 20,000,000 Astral shares worth $3,000,000.
- Payment is entirely in scrip at a deemed $0.15 per share, so the real value will move with Astral's share price, and the announcement does not state that any cash is received.
- Half the consideration, 10,000,000 shares, is voluntarily escrowed for six months from completion.
- Completion still hinges on Astral shareholder and regulatory approvals plus third-party agreements, with no completion date disclosed.
- Management says the sale lets Estrella focus on its flagship Timor-Leste tenements, where it is pursuing manganese, copper and gold potential.
Estrella Resources enters binding agreement to divest Spargoville Nickel Rights to Astral
Estrella Resources (ASX: ESR) has entered into a binding agreement to divest 100% of its Spargoville Nickel Rights to Astral Resources NL (Astral). The buyer is Mandilla Nickel Pty Ltd, a wholly owned subsidiary of Astral.
Estrella is to receive 20,000,000 Astral Shares at a deemed issue price of $0.15 per share, for total consideration of $3,000,000. A deemed issue price is the price the parties agreed for the deal, not a market price.
The transaction remains subject to the satisfaction or waiver of certain conditions. That means the deal is binding but not yet complete.
What is being sold
The rights are currently held by WA Nickel Pty Ltd (Seller), a wholly owned subsidiary of Estrella. They cover the following tenements:
- West Kambalda Tenements: M15/395, M15/703, L15/255 and L15/128
- Spargos Tenements: M15/1828
The buyer is to acquire all of the Seller’s legal and beneficial Nickel Rights. The sale covers those Nickel Rights only, not the tenements themselves or Estrella’s wider Western Australian interests.
Deal terms at a glance
| Term | Detail |
|---|---|
| Buyer | Mandilla Nickel Pty Ltd, a wholly owned subsidiary of Astral Resources NL |
| Seller | WA Nickel Pty Ltd, a wholly owned subsidiary of Estrella Resources |
| Consideration Shares | 20,000,000 fully paid ordinary Astral Shares |
| Deemed issue price | $0.15 per Astral Share |
| Total value | $3,000,000 |
| Escrow | 10,000,000 Consideration Shares voluntarily escrowed for 6 months from completion |
Escrow means the shares are held back from sale for a set period. Here, half the Consideration Shares are subject to a voluntary 6-month escrow from completion, which limits near-term selling of that portion.
Conditions to completion
Completion is conditional upon, and subject to the satisfaction (or waiver, as permitted) of, a number of conditions precedent including (but not limited to):
- Astral obtaining all necessary shareholder and regulatory approvals or waivers under the Listing Rules, Corporations Act or any other applicable law to allow it to issue the Consideration Shares
- The parties and/or any relevant third party entering into any agreement required to complete the transaction, including any deed of assignment and assumption
- The parties obtaining all necessary shareholder, regulatory or third-party approvals or waivers to lawfully complete the transaction
The announcement does not disclose a completion date. It describes the remaining terms as standard for agreements of this nature.
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Understanding a nickel rights divestment
A company can sell its rights to a particular commodity on its tenements without selling the whole business. Estrella is selling its Nickel Rights, not itself.
Because payment is in the buyer’s shares, Estrella would share in Astral’s future performance. The consideration is in scrip, so its value will move with Astral’s share price, and the $0.15 deemed price is fixed for the agreement only.
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Refocusing on Timor-Leste
Management says the sale supports a sharper focus on its flagship tenements.
Robert Mencel, Managing Director
“We are pleased to reach a binding agreement with Astral Resources which allows Estrella to increase its focus on its flagship tenements in Timor-Leste, while still retaining investment upside from the Company’s existing suite of assets.”
The company’s description of its Timor Leste portfolio includes:
- Manganese mineralisation discovered at several sites
- The Ira Miri deposit excavated to extract a 27,000t bulk sample, to be sold as a market appraisal exercise
- Ongoing exploration for manganese
- Several occurrences of copper mineralisation identified, with the company actively pursuing copper and gold potential
For you as an investor, the deal exchanges non-core nickel interests for Astral equity while Estrella concentrates on Timor-Leste. The announcement does not disclose how the shares will be used, and it does not state that any cash is received.
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