LONDON (ShareCast) - (Sharecast News) - Sunrise Resources said on Thursday that it has reached agreement with Power Metal Resources to sell its Garfield and Stonewall Properties in Nevada.
The AIM-traded firm said the sale to its AIM peer would net consideration of £20,000 in cash, and the issue of 2.25 million new shares in Power Metal.

It said the shares would be issued by Power Metal at a price of 2.75p per share, imputing a value of £61,875 for the share consideration and £81,875 for the total consideration.

The Garfield Project is held by the company's wholly-owned subsidiary SR Minerals, with the Stonewall Project held by another 100%-owned firm Westgold.

Sunrise said the sale would generate a combined profit of £33,329 based on the £40,671 carrying value of the two projects as at 31 May, and the market price of the shares.

The company said it would retain a 2% net smelter return royalty in respect of the properties, half of which could be purchased by Power Metal for $1m for each property.

In addition, 2.25 million warrants would be issued to Sunrise, with each warrant entitling the holder to subscribe for one new share in Power Metal at a price of 3.75p each.

Should the volume-weighted average price of Power Metal shares meet or exceed 10p for five trading days, Power Metal could serve notice of 14 calendar days on Sunrise to exercise and pay for the warrants, or the warrants would be cancelled.

Funds raised by the transaction would be used for general working capital purposes, the board said.

It added that the Garfield and Stonewall projects were "non-core, early-stage" mineral exploration projects which were acquired at low cost by Sunrise, by claim-staking on public lands.

Limited exploration and data evaluation carried out by the company to date had identified targets for sediment-hosted skarn and porphyry-style copper-gold mineralisation at the Garfield Project, and epithermal-style gold-silver mineralisation at the Stonewall Project.

The company had spent £2,356 on the two projects over the last 12 months.

"This disposal of these two non-core assets is in line with strategy and our continuing focus on our CS Pozzolan Perlite Project in Nevada," said executive chairman Patrick Cheetham.

"Nevertheless, we consider these two projects to be highly prospective and I am delighted that this agreement gives us not only a profit on sale but also exposure to the upside potential of these projects through our retained royalty interests.

"We intend to be a holder of the Power Metal Resources shares for the foreseeable future as we see a number of value catalysts for this company over the next few months."

At 1428 BST, shares in Sunrise Resources were down 5.24% at 0.24p, while those in Power Metal Resources were up 3.74% at 2.44p.

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