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Saracen to acquire Talisman's Sinclair nickel project in Australia

Saracen Mineral Holdings Ltd. entered into a binding agreement to acquire Talisman Mining Ltd.'s subsidiary Talisman Nickel Pty Ltd., owner of the Sinclair nickel project in Western Australia., the companies said in separate statements on Sept. 27.

The cash consideration is A$10 million payable at completion expected in end-October, and a 2.0% net smelter royalty payable on metal production from the Sinclair tenements and non-precious metals production from the Saracen-owned Waterloo tenement. The transaction is conditional upon Glencore PLC's subsidiary Xstrata Nickel Australasia Operations Pty Ltd.'s consent to the sale of Talisman Nickel to Saracen, and the infrastructure remaining on site at completion.

By acquiring all shares in Talisman Nickel, Saracen will assume Talisman Nickel's obligation to make a conditional A$2 million deferred payment to Xstrata payable within six months should production of nickel products at Sinclair restart by Feb. 4, 2021, and Talisman Nickel's contingent environmental liability for Sinclair of A$9 million.

The deferred contingent consideration agreement between Talisman Mining and Glencore also includes the right for Glencore to make an offer for off-take for the first 20,000 tonnes of contained nickel products produced from the project, or match the best third-party off-take offer.

Talisman said that upon completion of the transaction, it will have cash resources of about A$18 million to support its exploration at the Lachlan copper-gold project and the Lucknow gold project in New South Wales, Australia, and its business development program targeting prospective exploration and advanced development gold and base metal assets in Australia or other low risk jurisdictions.

Saracen noted that the Sinclair project has a highly prospective yet underexplored gold tenure.

Talisman acquired the Sinclair assets from Glencore in October 2014.