Silver Lake Resources (ASX: SLR) can proceed with the acquisition of Phillips River Mining's (ASX: PRH) Trilogy Polymetallic Project following resolution of negotiations regarding a bulk offtake agreement.
The acquisition of the Trilogy assets, which include the Myamba farm and infrastructure on the farm, was conditional upon the revision of an agreement between Phillips River and LN Metals International for the delivery of bulk lead and zinc concentrate.
Phillips River reported that, due to market conditions and development delays, the Trilogy assets would not have been in a position to meet the delivery schedule under the original agreement.
Revisions to the Offtake Agreement are subject to the completion of the asset sale to Silver Lake.
If the sale is completed, Silver Lake will be required to sell the concentrates to LN Metals if produced from the Trilogy deposit, up to a maximum of 110,000 dry tonnes.
With the Offtake Agreement terms resolved, Silver Lake is able to proceed with the acquisition. The next steps include a shareholder meeting for Phillips River to seek approval for the deal from shareholders.
Completion of the asset acquisition is scheduled for June 2012.
Phillips River asset acquisitions
Silver Lake is set to acquire a number of assets from Phillips River, including the Kundip Mining Centre, which will give Silver Lake a third potential production centre along with a number of targets to follow up.
Kundip hosts a JORC Resource of 1 million ounces of gold, 10 million ounces of silver and 95,000 tonnes of copper contained in two main mining centres within 10 kilometres of each other. The project has been subject to a Definitive Feasibility Study.
Silver Lake will purchase the non-Trilogy assets for consideration of about $20 million. Consideration for the Trilogy acquisition is 2.29 million Silver Lake shares, and settlement is subject to the completion of the Kundip and Other Assets sale.