Reed Resources proceeds with non core Nimbus assets sale to MacPhersons Reward Gold

Reed Resources (ASX: RDR) has reported that MacPhersons Reward Gold (ASX: MRP) has completed a review to purchase the assets of the Nimbus Silver Project, located at Kalgoorlie, from Reed.

The project is being acquired through the sale of Reed's subsidiary Kalgoorlie Ore Treatment Company Pty Ltd (KOTC) and includes mine, mill and polymetallic deposits. MacPhersons will take possession of the operations within four weeks.

As announced on May 20 the sale which remains subject to due diligence will see MacPhersons pay cash and scrip consideration of $4.5 million (A$3 million cash and A$1.5M in MRP ordinary shares) plus reimburse Reed for up to $500,000 of costs associated with power line installation and ball mill upgrade prior to the contract becoming unconditional.

MacPhersons will pay a deposit of $100,000 to secure the contract which includes a 3 month due diligence period, during which time certain permitting approvals are to be obtained.

The deposit is non-refundable except if those approvals are not obtained. The parties are to enter into a formal sale agreement to reflect the terms of the binding MOU.

Settlement will occur within 5 business days of the completion of successful due diligence and receipt of permitting approvals.

Reed will retain a 1% Net Smelter Royalty on zinc production from KOTC’s two mining leases.

KOTC was acquired in April 2009 for A$2.5 million, with approximately A$1 million spent on refurbishment and rehabilitation activities. On this basis Reed will book a circa A$1 million profit on the sale of this asset.

CSA Global is preparing a review of the remaining historical mineralisation and reporting of the review will be released in the near future.

A scoping study has been completed for the addition of a gold circuit to be added to the existing Nimbus mill. Scheduling is underway to re-commission the mill in mid-2012.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/18107/reed-resources-proceeds-with-non-core-nimbus-assets-sale-to-macphersons-reward-gold--18107.html