PERTH (miningweekly.com) – ASX-listed Potash West has reached an agreement with a subsidiary of fellow-listed Arunta Resources to divest of East Exploration, which holds the South Harz potash project, in Germany.

East Exploration is 50% held by Potash West, with the balance held by a private owner.

Under the terms of the transaction, Arunta subsidiary Davenport would acquire East Exploration in exchange for 36.45-million Davenport shares, along with two trances of 33.85-million performance shares each.

Davenport would pay an option and exclusivity fee of A$250 000, the first A$100 000 of which was payable within five days of signing the term sheet, with the balance of the funds due by November 1, subject to the satisfaction of a due diligence.

The acquisition would occur after, and subject to, a proposed demerger of Davenport from Arunta, with Davenport seeking a primary listing on the ASX. Following the demerger, Davenport hoped to raise some A$480 000 through the placement of six-million shares at an issue price of 8c each to fund its initial public offering (IPO) process and to raise working capital.

As part of the IPO process, Davenport was hoping to raise A$4-million by issuing 20-million shares, at 20c each, with Davenport and Potash West shareholders to be given priority to participate in the capital raising.

Arunta MD Angus Edgar said the acquisition of East Exploration was a significant step forward in bringing shareholder value to Davenport.

The South Harz project comprised two exploration licences covering some 457 km² in central Germany. Historical resource estimates were carried out in the 60s and 80s, and planning for a confirmatory drilling programme was now in progress and would be finalised in the next few months.

The programme would target areas of thick mineralisation at shallower depths.