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IMX Resources Sells Mt Woods Stake To OZ Minerals

IMX Resources (ASX: IXR, TSX: IXR, IXR.WT) is set derive around $8.7 million in funds following signing a Heads of Agreement with OZ Minerals (ASX: OZL) over the Mt Woods Copper-Gold joint venture.

IMX is set to sell (subject to execution of binding transaction documents and required approvals being obtained) its 49% interest to OZ Minerals. As part of the deal, OZ Minerals' shares in IMX are to be cancelled with replacement shares placed to new investors.

IMX will then use the proceeds to fund working capital and ongoing exploration at the Ntaka Hill Nickel Sulphide Project in Tanzania.

Neil Meadows, managing director for IMX, commented: "This agreement provides an elegant and equitable solution to the dissolution of the Mt Woods Joint Venture with OZ Minerals and allows both parties to walk away winners.

"IMX receives a significant injection of cash and we smoothly manage the exit of a major shareholder from our register and introduce new investors through a placement, without any dilutionary impact on our existing shareholders."

Heads of Agreement details

IMX and OZ Exploration are parties to the Mt Woods joint venture whereby OZ Exploration have committed to spend $20 million over 5 years to retain a 51% interest in the non-iron rights on IMX's Mt Woods tenements in South Australia.

At the end of September 2012 OZ Exploration had spent around $14 million of the $20 million.

Under the commercial terms set out in the Heads of Agreement, and subject to execution of binding transaction documents and the various approvals and consents noted below, OZL agrees to pay IMX $5 million cash.

In addition, upon the required IMX shareholder approvals being obtained and completion of the transaction, IMX and OZL have agreed to cancel the 33,909,000 IMX ordinary shares held by OZL.

Nil cash consideration will be payable by IMX to OZL for that cancellation, however, IMX expects to issue 33,909,000 replacement shares in the coming days to new investors.

The issue of new shares to off-set the share cancellation will mean that the total funds derived from the sale, share cancellation and capital raise will be around $8.7 million, with (assuming completion occurs and IMX shareholder approval is obtained) no overall increase in issued capital or dilution to existing shareholders.

Until such time as shareholder approval is obtained and completion occurs there will, however, be an intervening period where the issued capital will increase above the 362 million shares currently on issue.

Key terms

A heads of agreement has been signed but is non-binding until IMX and OZL complete the transaction documentation, expected to be before the end of November 2012. Key terms of the heads of agreement not explained above include:

- OZL will pay a $3 million deposit to IMX on signing of binding transaction documents.

- While legal title to all the joint venture exploration licenses will transfer to OZL on completion, IMX shall retain (subject to any permits or consents agreed to by the Minister of Mines under the Mining Act and other regulatory authorities) certain rights. In particular, IMX will retain the right to be granted access to the tenements for the purposes of exploration for iron ore after prior notification and consultation with OZL on planned activities.

- The Cairn Hill mining license (ML6303) does not form part of the sale agreement, and as such IMX shall retain the non-iron ore rights over the Phase 1 Area of the Cairn Hill Mining Licence (ML6303) whilst the Cairn Hill joint venture retains the iron ore rights; and

- A number of relevant consents are required for completion of the Transaction, including: approval of IMX shareholders, State and Commonwealth Government approvals as well as FIRB approval.

IMX will convene an Extraordinary General Meeting so that shareholders can vote on the transaction, and also vote on the selective cancellation of OZL's shares.


The importance of this deal is that it delivers IMX sufficient cash to continue exploration and evaluation work on the wholly owned Nachingwea property in Tanzania, which hosts the Ntaka Hill Nickel Sulphide Project.

IMX has recently been delivering a string of positive nickel sulphide results from the project, with Ntaka Hill one of the world's best un-developed nickel sulphide projects with the potential to produce a very clean, high quality premium nickel concentrate.

The pending sale of the Mt Woods interest also simplifies IMX's project portfolio and structure, allowing resources to be allocated to the company's core projects.

IMX is already well-funded with $19.2 million cash at bank at the end of September 2012, this deal will enhance future prospects from the Mt Woods sale.

Highlighting the other assets of IMX's portfolio, Cairn Hill joint venture (IMX 51%) generated significant positive cash flow of $4.7 million in the September quarter 2012, a strong achievement considering the reduction in commodity prices and continued strength of the Australian dollar causing challenging conditions.

Not to be forgotten, IMX has another asset which is currently worth over $3 million, the investment in Uranex (ASX: UNX).

Considering these factors the current market valuation of just $56 million for IMX is light, considering cash and investments post the Mt Woods deal - the company will have an enterprise value in the $30 million region.

With Cairn Hill generating cashflow and Nachingwea continuing to intersect some very impressive nickel sulphide results - the pullback in the IMX share price to $0.155 provides investors a chance to 're-load'.