Sandfire to Buy Out Joint Venture Partner Talisman

Sandfire Resources (ASX:SFR) is set to acquire Talisman Mining’s (ASX:TLM) 30-percent share of the Springfield joint venture (JV) in Western Australia.

The Springfield JV encapsulates the Monty copper-gold deposit and surrounding exploration tenements, which are adjacent to Sandfire’s wholly owned Doolgunna project. The agreement will also see Sandfire acquire Talisman’s 27-percent stake in the nearby Halloween West project.

The AU$72-million transaction sets Sandfire up to acquire 100 percent of Talisman A, a subsidiary of Talisman that holds the company’s stakes in the Springfield JV and Halloween West.

Once the deal is complete, Sandfire will have sole ownership over the components of the Springfield JV; it already has a 70-percent stake in the asset.

The company will pay for the acquisition using existing cash reserves, which sat at AU$188 million as of March 31 of this year. Additionally, future discoveries at the Springfield JV will be subject to a 1-percent net smelter return royalty.

Sandfire Managing Director and CEO Karl Simich described some of the major upsides to the agreement, including the “crystallisation” of upfront value for Talisman shareholders.

“The transaction will simplify and streamline the development of Monty and any further exploration going forward,” he said.

“As the owner of the only operating base metals processing plant in the region, our strategic focus is on consolidating growth opportunities in the district which allow us to leverage this infrastructure and further strengthen our dominant footprint across the Bryah Basin,” Simich added.

The Springfield JV is located in the Bryah Basin in a proven volcanogenic massive sulfide (VMS) province. As mentioned, it is next to Sandfire’s Doolgunna project, which includes the DeGrussa copper mine.

The Monty deposit, which lies within the Springfield JV, was the site of a high-grade VMS copper-gold discovery in June 2015. It was the first time Sandfire and Talisman had encountered a significant accumulation of high-grade copper and gold outside of DeGrussa.

Sandfire was sitting at AU$9.52 at close of day Monday (June 11). It is up 35.23 percent year-to-date.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.