- NuEnergy Gas (NGY) is selling a net smelter royalty it has held for almost 30 years to Canada-based Metalla Royalty and Streaming
- NuEnergy currently holds the 2.5 per cent net gold smelter royalty for the north and south extensions of the Fosterville Gold mine, which is operated by mining giant Kirkland Lake Gold (KLA)
- In consideration for the royalty, Metalla will pay $2 million in cash and $4 million in its TSXV-listed shares
- NuEnergy first acquired the asset over 30 years ago and is selling the royalty to free up liquidity and focus on its Indonesian gas projects
- NuEnergy Gas shares remain unchanged just after market open, trading for 0.9 cents
NuEnergy Gas (NGY) is selling a net smelter royalty it has held for almost 30 years to Canada-based Metalla Royalty and Streaming.
NuEnergy currently holds the 2.5 per cent net gold smelter royalty for the north and south extensions of the Fosterville Gold mine, which is operated by mining giant Kirkland Lake Gold. In consideration for the royalty, Metalla will pay $2 million in cash and $4 million in its TSXV-listed shares.
NuEnergy first acquired the property over 30 years ago and converted its holding into the royalty in 1992. The company is selling the long-held asset to realise its value and free up liquidity amid the record high-gold price.
The funds raised are enough for NuEnergy to cash out of its borrowing arrangement with major shareholder, Globaltec. However, Nu Energy has stated it does not, at this time, intend to utilise the funds in this way.
Alan Fraser, Director of NuEnergy, said the recent underground development at Fosterville of bonanza grade intersections has significantly improved the underlying value of this gold asset, which helped motivate the sale.
He went on to comment on the company’s prospective Indonesian gas assets.
“NuEnergy’s focus is the development of unconventional gas in the highly prospective area of Indonesia in South Sumatra, where the Company has spent about $70 million. NuEnergy is the most advanced explorer in the unconventional gas sector and enjoys a sound working relationship with the Indonesian Authorities with the grant of production approvals imminent,” Alan said.
“This sale will only enhance NuEnergy’s outlook and assist in advancing the Indonesian gas activities,” he said.
NuEnergy Gas shares remain unchanged just after market open, trading for 0.9 cents at 10:29 am AEST.