Viking Mines (ASX:VKA) First Hit Gold Project divestment for up to $5M

Viking Mines has entered into binding agreements to divest 12 tenements encompassing its non core First Hit Gold Project in the Eastern Goldfields of Western Australia to First Au Limited (ASX: FAU) for total consideration of up to $5M.

The transaction comprises upfront cash and equity consideration together with performance linked consideration and, according to the announcement, allows Viking to direct its capital and technical resources towards its flagship Linka Tungsten Project in Nevada, USA, where a maiden reverse circulation drilling campaign is scheduled to commence in the coming weeks.

Highlights

• Viking has entered into binding agreements to divest 12 tenements encompassing the non core First Hit Gold Project to First Au Limited.
• Total transaction value of up to $5M, comprising $2.2M upfront and up to $2.8M in performance rights.
• Viking retains exposure to future discovery through its shareholding in First Au and the performance linked consideration.
• First Au will assume a minimum $500,000 drilling commitment on the transaction tenements within 12 months of completion.
• According to the announcement, the divestment allows Viking to direct its capital and technical resources towards the Linka Tungsten Project in Nevada, USA, where a maiden RC drilling campaign is scheduled to commence in the coming weeks.

Under the binding agreements, Viking will receive $1.2M in cash, $1.0M in First Au shares issued on completion, and up to $2.8M in First Au performance rights, with each performance right milestone, if achieved by First Au within five years of completion, entitling Viking to First Au shares to the value of $700,000.

The milestones comprise a drill intercept of 40 grammetres, together with Mineral Resources of at least 25koz, 75koz and 100koz using a 0.5 g/t cut off.

The issue price for the consideration shares is the lower of First Au’s 15 day VWAP prior to execution of the agreements or $0.01 per share, and the transaction also provides for First Au to assume a minimum $500,000 drilling commitment on the transaction tenements within 12 months of completion.

According to the announcement, Viking retains exposure to future discovery through its shareholding in First Au and the performance linked consideration.

Completion remains subject to customary conditions, including regulatory and third party approvals and any ministerial consents required, and is expected to occur in the coming weeks following satisfaction or waiver of the conditions precedent.

Under the section titled Strategic Rationale, Viking states that the First Hit Project divestment advances its transition to a focused critical minerals developer.

The company states that its technical and financial capacity will be directed towards the USA Tungsten Project portfolio, which encompasses the flagship Linka Project.

At the Linka Tungsten Project in Nevada, Viking has secured US Bureau of Land Management approval for its maiden 63 hole RC drilling programme and has contracted DrilCor as drilling contractor.

The campaign, described in the announcement as the first sub surface testing at Linka in more than 40 years, is scheduled to commence in the coming weeks across three priority target areas.

With final mechanical checks and maintenance nearing completion, the rig is anticipated to be mobilised immediately after the 4th July holidays and drilling is expected to commence by mid July.

Viking Mines Managing Director and CEO Julian Woodcock said:

“This transaction does two things at once. It crystallises value from a quality gold asset that is no longer core to our strategy, and it does so in a way that keeps our shareholders exposed to its upside as FirstAu takes it forward. First Hit deserves a dedicated owner, and that owner is now committed to drilling it, at no cost to us.”

According to the announcement, proceeds from the First Hit Project divestment strengthen Viking’s balance sheet and provide additional funding flexibility to advance Linka beyond the maiden drilling campaign.

Completion remains subject to customary conditions, including regulatory and third party approvals and any ministerial consents required, and is expected to occur in the coming weeks following satisfaction or waiver of the conditions precedent.

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