Graphite prioritised: Archer to sell magnesia project
Amidst a strategic review of its assets, Archer Exploration Limited (ASX:AXE) has agreed to sell its Leigh Creek Magnesia Project in South Australia with plans to use the proceeds to fund the development of its advanced and speciality materials business.
The company signed a legally binding share sale agreement for the sale of all of the shares in Leigh Creek Magnesite Pty Ltd (LCM) and CH Magnesite Pty Ltd (CHM) — both are wholly owned subsidiaries of AXE which hold the magnesia project.
Located approximately 20 kilometres northwest of Leigh Creek Township, the Leigh Creek Project consisting of two granted exploration licences – EL 5730 (held by LCM) and EL 6019 (held by CHM), is the world’s largest cryptocrystalline magnesite deposit and hosts 48% of world cryptocrystalline (small grained) magnesite resources.
AXE’s strategic review of its assets comes as the company looks to focus its future investment and management attention towards areas that will deliver the best risk weighted returns for its investors.
This sale of the Magnesia Project allows AXE to intensify its focus on its emerging advanced and speciality materials business with the associated development of the Campoona graphite mine.
AXE Executive Chairman, Greg English, said, “We believe this is a good deal for our shareholders. Whilst we still see the potential for the eventual development of the Magnesia Project, the funds from the sale announced today can be used more immediately to drive greater shareholder value through the development of our advanced and speciality materials business.”
“We want to focus on our areas of strength, and we have excellent capability with Mohammad who is driving our graphite, graphene and advanced materials strategy, as highlighted by our recently announced collaboration agreements for the development of carbon based bio-sensors and quantum computing technologies.
“We also remain excited about our Blue Hills copper project and the prospectively of our extensive cobalt tenements. Given the depth of opportunities within the Archer portfolio, it is imperative for us to concentrate on the projects that we believe will create most shareholder value, and where we are less dependent upon third party decisions to drive projects forward.”
However AXE remains a speculative stock and if considering this stock for your portfolio you should take all public information into account and seek professional financial advice.
The buyer of the Magnesia Project, a private Australian company, will pay a $2.0 million base payment plus a bonus to AXE. The buyer has until the end of August to complete due diligence to its satisfaction and decide whether it will complete the purchase. It deal is also to be approved by AXE shareholders.