Hammer Metals enters agreement with Carnaby Resources for Sub-blocks equity sale

Hammer Metals (ASX:HMX) has entered a binding agreement to sell equity in three Sub-Blocks within its Mount Hope South tenement in Queensland’s Mt Isa region to Carnaby Resources (ASX:CNB) for $20 million.

These Sub-Blocks are strategically located adjacent to Carnaby’s Mining Lease, where Carnaby’s Mount Hope Central discovery is located. Hammer, an active mineral explorer, is committed to uncovering copper-gold deposits.

“The Transaction delivers very positive outcomes for both parties. We are extremely pleased to have realised this strong valuation outcome of up to $20 million for the three Sub-Blocks as part of this landmark transaction with our neighbour, Carnaby Resources,” Hammer’s Managing Director Daniel Thomas said.

“We see this as a good example of the emerging mining sector working collaboratively to deliver value to shareholders through a pragmatic and commercial approach to the advancement of copper-gold assets.”

The key terms of the Transaction include,

• A total consideration payable by Carnaby Resources to Hammer of up to $20 million.
• Hammer will retain a 30% equity stake and will be free-carried by Carnaby to production from the three Sub-Blocks.
• The initial tranche of payments comprises $4 million in cash and $5 million in Carnaby shares. This funding will support Hammer in intensifying exploration drilling to increase its Mount Isa regional copper resource inventory.
• $5 million in cash will be payable to Hammer upon a Mount Hope open pit decision to mine, including if this decision relates to ML90240 (100%-owned by Carnaby).
• A final payment of $6 million in cash will be made upon a final investment decision for any separate new development on the Sub-Blocks, which could include prospects such as South Hope, Mount Hope U/G Extensions, and The Stubby.

“Hammer will now use its enhanced cash position to intensify our exploration efforts both at Kalman as well as at our other exciting copper prospects such as Hardway, Bullrush and Mascotte, as we look to add to our existing copper inventory strategically located in the Mt Isa district of North Queensland.” Mr Thomas said.

Blue Ocean Equities will serve as the financial adviser, and Thomson Geer will serve as the legal adviser to Hammer regarding the Transaction. The Transaction is expected to be completed before the end of April 2024.

Shareholders are responding favourably to the transaction so far today, with shares up more than 15%.

HMX last traded at 4.4c, at 11 am AEDT.