Sticking with its theme to focus on a couple key projects, Transition Metals (TSX-V:XTM) said Tuesday morning that it has entered into a binding letter of intent to sell its Dundonald Nickel Project situated outside Iroquois Falls, Ontario to Australia's VaniCom Limited for C$500,000 in cash and stock. Per the agreement, VaniCom will pay Transition C$50,000 upfront, plus another C$100,000 upon the closing of a definitive agreement, along with issuing Transition VaniCom stock valued at C$350,000.
The deal also specifies that Transition will retain a 2.5% net smelter royalty on future production at the property and that VaniCom must spend a minimum of C$750,000 in exploration and development costs at DunDonald over a 36-month period.
The 950-hectares Dundonald property hosts high grade nickel-copper-cobalt-PGM (platinum, palladium, gold) mineralization along a 9.5-kilometer strike length. The project is adjacent to the formerly producing Alexo Nickel Mine. Between 2004 and 2005 Canadian Arrow Mines produced 30,138 tonnes of ore averaging 1.93% nickel containing 1.3 million pounds of nickel from open pit mining of the Alexo and Kelex zones of its nearby project.
Dundonald has a historic resource estimate of 116,000 tonnes grading 3.16% nickel carrying elevated Cobalt and PGM's based on approximately 75,000 metres of drilling. In addition, Copper-Zinc, VMS potential exists on the property that is exemplified by the occurrence of the Terminus Zone (Notable drill intersection; 1.37% Cu, 7.53% Zn, 0.13% Co and 1.1 g/t Au over 10.13m). The company cautions that these estimates are historical by nature and need to be brought to current National Instrument standards.
Transition is focused independently on its Aer-Kidd Nickel-Copper-PGM project in the Sudbury mining district, a project that is actively being funded by its subsidiary, Sudbury Platinum Corp., as well as consolidating gold projects in the Abitibi. The Sudbury-based company also has a joint ventures with North American Palladium on the Sunday Lake project in Ontario and Gowest Gold on the Pipestone project near Timmins, Ontario. The company has also optioned properties to Aldershot Minerals and Forum Energy Metals.
Investors aren't responding to the sale news this morning. Shares of XTM are flat at 10.5 cents, representing a 52-week low for the stock.
