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Metalicity selling Australian zinc assets to Kimberley Mining ahead of IPO

Metalicity Ltd. agreed to sell its Admiral Bay, Napier Range and Emanuel Range zinc projects in Western Australia to Kimberley Mining Ltd. ahead of Kimberley Mining listing on the TSX Venture Exchange.

Kimberley Mining is planning a C$25 million initial public offering in September, priced at 80 cents per share, with Metalicity expected to retain an about 40% interest in the company. Proceeds will go toward drilling and feasibility studies, primarily at Admiral Bay.

Metalicity said May 29 that consideration for the zinc assets will total C$32.5 million in cash and shares, comprising up to C$12.5 million in cash and 25 million Kimberley Mining shares valued at approximately C$20 million.

The C$12.5 million will be paid in stages, including C$500,000 due upon completion of a seed capital raising and C$4 million on completion of the IPO. Up to C$5 million will be due 12 months from the IPO and up to C$3 million will be due 24 months from the IPO, both subject to certain share price hurdles.

Metalicity, which is planning a shareholder meeting this quarter to seek approval for the deal, said the cash will enable it to focus on exploration of its Yerrida cobalt project and further M&A opportunities.

"Following Metalicity shareholder approval, Kimberley Mining will be well established to rapidly progress the IPO process which will best allow the progression of Admiral Bay in a market of higher valuations for base metals projects of Admiral Bay's scale and in an increasingly tight zinc market," said Matt Gauci, managing director of Metalicity.

Earlier in May, Metalicity named Tom Panoulias as president and CEO of Kimberley Mining to lead the company through the IPO.

A mid-2016 resource update for Admiral Bay included a 30% increase in the zinc equivalent grade and a 100% increase in contained zinc equivalent, comprising inferred resources of 170 million tonnes grading 4.1% zinc, 2.7% lead and 25 g/t of silver, or 7.5% zinc equivalent.