Tusker Minerals (ASX:TSK) agrees to divest Machinga REE Project for up to A$4M

Tusker Minerals has entered into a binding agreement with AuKing Mining Limited (ASX:AKN) for the proposed divestment of 100% of the Machinga Rare Earth Elements (REE) Project in Malawi, with total consideration of up to A$4M comprising staged cash, equity and performance consideration.

The proposed transaction strengthens Tusker’s balance sheet and supports exploration and development activities across its rutile and heavy mineral sands portfolio in Cameroon and Malawi.

Highlights

The Machinga project comprises exclusive prospecting licences EPL 0529 and EPL 0705, held by Green Exploration Limited, a wholly owned subsidiary of Tusker.

The proposed divestment follows Tusker’s strategic review of its REE assets and enables the company to focus on its titanium-rich mineral sands portfolio.

Under the proposed transaction, AuKing will acquire 100% of the Machinga REE Project from Green Exploration Limited.

Consideration includes A$750,000 cash at completion, 30,000,000 fully paid ordinary AuKing shares valued at A$750,000, and a further A$1,250,000 in cash payable 12 months after completion.

The agreement also includes 50,000,000 AuKing performance shares, which will convert into AuKing ordinary shares if the stated performance hurdle is achieved within three years from the date of issue.

The performance hurdle requires publication, within three years from the date of issue of the performance shares, of a JORC-compliant inferred Mineral Resource for the Machinga Project of at least 10Mt at 0.65% TREO, applying a 0.5% TREO cut-off grade.

Upon satisfaction of the performance hurdle, AuKing will issue ordinary shares with a value of A$1,250,000, calculated using the 90-day VWAP of AuKing shares as at the date the hurdle is satisfied, subject to a maximum of 50,000,000 ordinary shares.

The proposed divestment allows capital to be redirected towards Tusker’s core rutile and heavy mineral sands portfolio, which includes projects in Cameroon and Malawi.

The company’s rutile and HMS projects comprise district-scale tenements with high-grade mineralisation and proximity to infrastructure.

Tusker Chief Executive Officer Cliff Fitzhenry said the agreement followed the successful divestment of the Tundulu project and reflected Tusker’s approach to capital allocation and portfolio optimisation.

“This proposed transaction builds on the successful divestment of our Tundulu project and reflects our disciplined approach to capital allocation and portfolio optimisation.”

Mr Fitzhenry said the transaction enables Tusker to prioritise advancement of its high-grade rutile and heavy mineral sands assets in Cameroon and Malawi while retaining exposure to the rare earth sector through AuKing shares and performance shares.

The proposed structure enables AuKing to advance the REE potential of Machinga without further capital commitment from Tusker.

Completion remains subject to the parties entering into definitive transaction documentation and obtaining all necessary legal, regulatory, shareholder and third-party approvals, including approval from the relevant Malawian mining authority for the transfer of EPL 0529 and EPL 0705.

The proposed divestment follows Tusker’s strategic review of its REE assets and supports the company’s focus on its titanium-rich mineral sands portfolio.

Under the proposed consideration structure, Tusker will receive cash and equity consideration while maintaining exposure to Machinga through AuKing shares and performance shares.

Tusker continues to advance its portfolio of critical mineral assets across Cameroon and Malawi, including the Central Rutile Project and Douala Basin HMS Project in Cameroon, and the Mzimba Rutile and Salambidwe Projects in Malawi.