Silver Lake Resources (ASX: SLR) has terminated the merger implementation agreement with Phillips River Mining (ASX: PRH), and has now entered into an asset sale agreement to purchase the Munglinup Project.
Silver Lake said that it terminated the merger on enquiries undertaken by the company in relation to Phillips River have not, in its sole and absolute discretion, been satisfied and therefore condition precedent of the merger implementation agreement has not been satisfied.
Silver Lake directors disappointed
The directors of Silver Lake said that they are disappointed that this action was necessary. However, the due diligence process identified a potential issue with the concentrate delivery schedule within the metals offtake agreement for the Trilogy Project between LN Metals International Limited and Phillips River.
LN Metals is 46% owned by RMB Australia Holdings Limited, part of the resource-financing arm of Rand Merchant Bank.
After numerous extensions of time, Silver Lake did not have sufficient confidence that this issue could be satisfactorily.
Asset sale agreement and convertible note facility
Silver Lake has however entered into an asset sale agreement with Phillips River to purchase the Munglinup Project for $325,000, which is made up of five exploration permits.
Silver Lake currently holds convertible notes in Phillips River to the value of $325,000, and under the Convertible Note Facility, all amounts outstanding under the facility become due and payable, at Silver Lake's sole election, within 14 days of termination of the merger implementation agreement.
Settlement under the asset sale agreement will occur later in the year and is subject to satisfaction of a number of conditions, with Silver Lake immediately assuming responsibility for the maintenance and ongoing costs of the tenements making up the Munglinup Project.