- Spectrum Metals (SPX) has extinguished its Penny West royalty agreement with Patina Resources
- As part of Spectrum’s acquisition of the Penny West gold deposit, the company has been providing Patina with a 0.5 per cent net smelter royalty
- Under the terms of the agreement, Spectrum is able to opt-out of the royalty deal for a one-time fee of $750,000, which it has now done
- The decision comes as part of an effort to simplify the management of the project and reduce administrative workloads
- Spectrum Metals shares have undergone no change, trading for 14 cents per share
Spectrum Metals (SPX) has extinguished its Penny West royalty agreement with Patina Resources.
Through its subsidiary, Zebra Minerals, Spectrum acquired 100 per cent of the Penny West gold project in October 2018 for a total consideration of $1 million.
As part of the deal, the company agreed to issue a 0.5 per cent net smelter royalty to Patina.
This did not apply to the first 7500 ounces recovered from the tenements, and a clause gave Spectrum the right to extinguish the royalty agreement for a one-time fee of $750,000.
Spectrum has now exercised this right as part of a broader move to simplify the management of the project and reduce administrative workloads surrounding any future developments at the site.
The funds used to opt-out of the agreement were sourced from Spectrum’s facility provided by Ramelius Resources.
Commenting on the decision, Alex Hewlett, Executive Chairman of Spectrum Metals, said that extinguishing the agreement was a necessary long-term measure.
“This was a prudent step to streamline Penny West development decisions in the future. We would like to thank Patina for their long-term support since the acquisition of the Penny West project in October 2018,” he added.
Penny West has a long history of successful production. Located in Western Australia, 30 kilometres south of the Youanmi gold mine currently owned by Vital Metals, the site was once one of the highest-grade open-pit mines in the country.
Between 1991 and 1992, the project produced 121,000 tonnes of ore at 21.8 grams per tonne.
Since Spectrum’s acquisition of the project, mineral resource estimates revealed 799,000 tonnes of ore at 13.8 grams per tonne, for a total of 355,500 ounces of gold.
Spectrum Metals shares have undergone no change, trading for 14 cents per share at 10:59 am.