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Middle Island to exit West Africa as focus shifts to Australia project

Middle Island to exit West Africa as focus shifts to Australia project

Wed Feb 13 2018


ASX-listed Middle Island (MDI) has signed a heads of agreement (HoA) to sell its remaining gold interests in West Africa, as its focus shifts to Western Australia.


The HoA with TSX-V-listed Tajiri Resources grants that company an option to acquire a 100% interest in the Reo gold project, in Burkina Faso.


The commercial terms involve aggregate cash payments to MDI of $335 000 and the issue of five-million shares, representing 8% of Tajiri's then post-issue expanded capital, plus a 2% net smelter return (NSR) royalty, which can be purchased by Tajiri for $5-million.


At first, Tajiri will pay MDI $35 000 on execution of the HoA in return for a three-month exclusivity period in which to complete its due diligence. When completed, Tajiri would pay a further $150 000 and issue to MDI 2.5-million Tajiri shares.


By that agreement, MDI will grant Tajiri an exclusive option to purchase MDI's entire interest in the Reo project over 18 months. During the option term, Tajiri must pay all expenses associated with maintaining the Reo project permits in accordance with Burkinabe law.


The transaction structure further allows MDI to retain a significant indirect interest in the upside potential of the Reo project.


"The full equity component, which will represent some 8% of Tajiri's issued capital on a fully diluted, post issue basis, also offers shareholders considerable exposure to Tajiri's highly prospective gold project interests in Guyana.


"On completion, the Reo project transaction will represent the divestment of Middle Island's remaining gold interests in West Africa, allowing the company to fully focus on its advanced Sandstone gold project development in Western Australia," MDI MD Rick Yeates said.