Antipa Minerals Ltd (ASX: AZY) shares are ending the week on a positive note.
In morning trade, the ASX mining stock is up 14% to 1.6 cents.
Why is this ASX mining stock jumping?
Investors have been buying the Paterson Province-based mineral exploration company's shares this morning after it announced a deal with Rio Tinto Ltd (ASX: RIO).
According to the release, the company has agreed binding terms for the sale of its 32% non-controlling interest in the Citadel Joint Venture Project to joint venture partner Rio Tinto Exploration.
Rio Tinto has agreed to pay a total consideration of $17 million cash for the stake.
The Citadel Joint Venture was established in 2015 between Rio Tinto Exploration and Antipa. It encompasses 1,200km2 of tenure in the Paterson Province of Western Australia.
Citadel hosts a Mineral Resource Estimate (MRE) across its Calibre and Magnum deposits which collectively total 127 million tonnes containing 2.84 Moz of gold at 0.71 g/t, 173 kt copper at 0.13%, and 2.1 Moz of silver at 2.1 g/t.
Management notes that the proceeds from the transaction will significantly bolster the ASX mining stock's cash reserves to approximately $23 million. It notes that this will allow further exploration and advancement of its 100%-owned Minyari Dome Gold-Copper Project in Western Australia.
The two parties still need to execute a formal sale agreement and enter into deeds in favour of the relevant Native Title parties. If everything goes to plan, completion is expected by November.
Why sell its stake?
While the Citadel Joint Venture seems like a promising project to be giving up a stake in, management thinks it is doing the right thing.
The ASX mining stock's managing director, Roger Mason, said:
We are very pleased to have signed a binding term sheet with long-standing Citadel joint venture partner, Rio Tinto. The sale of our minority, non-controlling, interest in the Citadel Project, which was a non-core asset for Antipa, liberates cash, providing an extremely solid financial foundation from which to accelerate the development of our flagship, wholly owned Minyari Dome Project.
Rio Tinto was the natural buyer for Citadel, and the A$17 million all-cash consideration fully reflects current value of our interest in the asset, positioning us to focus on unlocking the full potential at Minyari Dome. Our team is busy finalising an update to the existing Minyari deposit Mineral Resource including simultaneously preparing a maiden Mineral Resource for GEO-01. Together, these deposits will form a basis for a revised Minyari Dome Scoping Study. We look forward to sharing the outcomes from these project advancement milestones in the coming weeks.
