MMG Limited (MMG) has today entered into a sale agreement with QCG Resources (QCG) for the purchase of its Avebury nickel mine, currently on care and maintenance.
The total consideration is A$40 million, comprising a A$1.75 million deposit, payable within 15 business days of signing, A$33.25 million closing payment, A$2.5 million payable on production of the first 10,000 tonnes of nickel in concentrate and A$2.5 million payable on production of the second 10,000 tonnes of nickel in concentrate.
QCG is a privately owned exploration and mining development company based in Perth, Western Australia. The company has a particular focus on developing brownfield mining projects. Its executive team, including Chris and Doug Daws, has had significant exposure to nickel exploration and long-term involvement and interest in nickel developments in Australia.
The Avebury mine has been on care and maintenance since February 2009, not long before MMG acquired the mine. MMG initiated an internal review and external expression of interest process for the asset in 2011. MMG believes this offer provides the best opportunity to re-start the mine.
The sale is subject to a number of conditions precedent including QCG raising the funds required for its closing payment, MMG Board approval and regulatory approval. MMG will work with QCG to satisfy all conditions and expects completion of the sale within the next six months.
MMG Executive General Manager – Business Development, Mr Michael Nossal said, “We are pleased to announce this agreement with QCG Resources who we believe are well placed to bring the Avebury operation back into production.”
“We believe this offer represents the best outcome for both MMG and the Avebury asset,” he said.
“QCG is committed to a restart of the mine and MMG is confident that if the sale is completed, it will reinvigorate the Zeehan area, by providing new jobs and economic benefit to the region.”