The complex restructure of collapsed base metals and gold miner Kagara has taken another step forward, with liquidators of the Perth company striking a deal to offload some of its assets to associate Mungana Goldmines.
If the binding heads of agreement is completed, Mungana will take over ownership of Kagara's Chillagoe mines in northern Queensland.
The deal is worth $15 million to Kagara and will see it receive two convertible notes, exercisable at 10ï¿½ and 20ï¿½ per Mungana share once certain conditions have been satisfied.
Kagara already owns 60.7 per cent of Mungana - which was spun out of Kagara in 2010 as a gold stock, allowing Kagara to focus on copper, zinc and nickel - and could increase its stake to about 73 per cent once the first convertible note is exercised.
Although the deal with Mungana does not bring cash into Kagara's coffers, it should simplify the company's liquidation.
Kagara's liquidator FTI Consulting has struggled to sell the collapsed company's assets, including Chillagoe, because of depressed metal prices. Not helping the process was that Mungana retained the gold rights to the Chillagoe portfolio, which served as a deterrent to prospective buyers.
FTI said in a statement yesterday the deal with Mungana would fix the split ownership over Chillagoe's mineral rights.
FTI would not comment further and it remains unclear how it plans to sell the Mungana stake. Kagara's other key asset, which is also for sale, is centred around the Thalanga operation in central Queensland.
Mungana shares almost doubled to 2.7Â¢ on the Kagara news.