Cauldron Energy Limited (ASX: CXU) has made significant progress on the acquisition of river sand tenements with the company having been registered as the 100% owner of three exploration licences and one miscellaneous licence located at the mouth of the Ashburton River.
On December 23, 2020 and February 9,2021, Cauldron announced it had entered into a sale and purchase agreement (SPA) to acquire full ownership of a number of river sand leases covering substantial portions of three of the largest river mouths of Western Australia, located at Ashburton, Carnarvon and Onslow, each prospective for construction and reclamation from Onslow Resources Pty Ltd, Quarry Park Pty Ltd, Anthony Warren Slater and Regent Point Pty Ltd, together the vendors.
When entering the SPA, Cauldron committed to a heavily back-ended arrangement where much of the consideration is payable on transfer of the tenements to Cauldron and successful advance to mining production.
Because the tenements the subject of the SPA were at various stages of grant (for example, one mining lease had a production history of extraction, some exploration licences were granted and some were in application, and one mining lease was listed as ‘dead’), the SPA was structured where script consideration was payable in three tranches. Relevantly, a tranche is to be made on the successful transfer of granted licences (second tranche script payment) and then on the grant and transfer of the licences in application (third tranche script payment).
Under the SPA, the second tranche issue of 8.0 million fully paid shares was due and payable upon transfer of the granted licences. CXU has taken ownership of all licences except mining lease M08/487, which is pending the outcome of a proceedings and will require ministerial approval prior to being transferred. Cauldron and the vendor have agreed to modify the second tranche script payment to issue 4.0 million shares now and the balance of 4.0 million shares when M08/487 is successfully transferred.
Chief Executive Officer, Jess Oram, said Cauldron expects to benefit from its ‘first mover status’ and having early participation in a global growth industry. Global usage of construction sand is estimated to be ten times that of global bulk coal and forty times bulk iron ore (refer ASX announcement 23rd December 2020).
The transfer of ownership is a significant step towards our efforts to become a significant exporter of sand, which will allow CXU to take advantage of the huge global demand for this under-appreciated commodity,” Mr Oram said.