Savannah Resources has agreed to divest its remaining 60% stake in Renison Coal, the owner of the Ashford Coking Coal Project in New South Wales (NSW), Australia, to Clara Resources for a total consideration of A$3.95m.

The deal also includes a royalty of A$0.75 per tonne on future coal sales from the project.

Subject to Clara shareholder approval, the transaction will see Savannah receive A$2.38m in cash and 11.1 million Clara ordinary shares, representing a 19.5% interest in Clara.

Deferred payments totalling A$1.49m and a retained royalty interest further align Savannah with the project’s future success.

The sale enables Savannah to focus on its gold mining ventures while maintaining significant exposure to the Ashford project’s potential.

Furthermore, the deal includes a royalty agreement for coal produced at the Ashford mine.

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The current resource estimate at the Ashford project stands at 14.8 million tonnes (mt) of in-situ coal.

The completion of the sale is expected by no later than 30 April 2024.

Final agreements, including a formal sale and purchase agreement, royalty deed, release deed and other necessary documentation, are to be drafted to finalise the proposed transactions.

Savannah chairman Stephen Bizzell said: “Completion of the sale of Savannah’s remaining shareholding in Renison Coal Pty Ltd will allow Savannah to bring forward realisation of value for the Ashford project for Savannah shareholders.

“It allows Savannah to remain focused on progressing our gold mining and exploration projects in North Queensland and provides a ‘pure play’ gold investment profile for Savannah investors.

“Savannah shareholders will retain considerable exposure to the Ashford Coking Coal Project’s future potential through the ~19.5% shareholding interest in Clara and the further deferred cash consideration to be received and the retained royalty interest on coal sold from the project.”

The Ashford Coking Coal Project is located within exploration licence tenements EL6234 and EL6428 in the Northern Tablelands.

Meanwhile, last year, Savannah selected two companies to jointly serve as advisers to lead the sale process for Portugal’s Barroso lithium project.