UPDATE 2.30pm: Bass Metals has struck a deal with Singapore's LionGold to stave off collapse but has had to sell its main asset to do so.
The company has agreed to sell its Hellyer mill operations in Tasmania for $13.5 million to LionGold and issue 58 million shares to it at one cent each to raise $580,000.
The transaction will give LionGold a 16.5 per cent stake in the company.
Bass said the deal would leave it with $6 million in cash, $2 million in a retention account, no debt and a renewed focus on exploration of its Tasmanian tenements and new opportunities.
The deal is subject to shareholders and Foreign Investment Review Board approval.
Bass said it and LionGold would now collaborate on exploiting new deposits in Tasmania with it focusing on base metals and the latter focusing on gold.
Bass managing director Mike Rosenstreich said the deal would revive the company's financial position, allow it to forge close ties with an emerging international resources group, allow it to retain access to a processing facility and share site maintenance costs at Hellyer.
"We will also retain sufficient surplus funds to meet general working capital needs and restart a comprehensive exploration campaign on our Tasmanian tenements," he said.
Bass shocked the market in January when it announced a sudden deterioration in performance had it teetering on the brink of financial collapse.
A blowout in mining costs, a poor processing performance and weak metal prices had pushed Hellyer close to "marginal".Bass Metals shares closed up 0.2 cents, or 13.33 per cent, at 1.7 cents.
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