Shares in Korab Resources skyrocketed after the company announced the sale of its Winchester magnesium deposit in the Northern Territory to Estonian investment company Augur Investments Oü for $33.2 million in cash and royalties.

The company said it had negotiated a sale price of $2 per tonne of magnesium oxide resource.

The known resource base consists of an indicated resource of 12.2mt at 43.1 per cent magnesium oxide and an inferred resource of 4.4mt at 43.6 per cent magnesium oxide.

Augur will pay $16.6 million on completion of the sale and an additional $1 per tonne per tonne of resource ($16.6 million) will be payable as a royalty.

The agreement is subject to Korab obtaining all regulatory and other approvals necessary for the sale of the asset and Augur completing due diligence.

The Winchester magnesite deposit is located within the Batchelor project, 70km south of Darwin.