PERTH (miningweekly.com) – ASX-listed Tanami Gold on Thursday defended itself against claims that the company had breached a heads of agreement (HoA) with fellow-listed Metals X when signing a joint venture (JV) agreement with gold miner Northern Star.

In February, Northern Star launched a bid to gain a majority interest in the Central Tanami gold project, in the Northern Territory.

Northern Star offered to acquire an initial 25% interest in the project for A$20-million, comprising A$11-million in cash and more than 4.2-million fully paid ordinary shares.

The gold miner would earn a further 35% interest in the project by sole funding all expenditure and cash requirements to bring the project back into commercial production, which would be measured by the Central Tanami process plant being refurbished and operated for a 30-day period, or producing 5 000 oz of gold.

The directors of Tanami had backed the Northern Star offer, in lieu of a previous offer received from Metals X, under which that company had offered to acquire a 25% interest in the Central Tanami project for A$11-million in cash and the allotment of four-million fully paid ordinary shares. Metals X had also offered to earn a further 50% interest in the project by sole funding all expenditure and costs required to bring the project back into commercial production.

At the start of commercial production, Metals X proposed that the two companies jointly operate as a JV, with Metals X acting as manager and operator. Tanami would be granted the option of selling its remaining interest in the Central Tanami project for $32-million in cash or Metals X shares, with the option exercisable at any time up to six months after commercial production was achieved.

Tanami told shareholders on Thursday that the company had now received a letter from Metals X's solicitors, claiming that the junior had breached the HoA by engaging with Northern Star and negotiating a deal with the gold miner, and putting this deal to shareholders as an alternative to the Metals X transaction.

Metals X further alleged that Tanami had provided misleading information in its releases to the market, in claiming that the Northern Star transaction was superior.

In its defence, Tanami pointed out that the Northern Star proposal had been unsolicited.

Tanami also denied that it made any recommendations to shareholders to vote in favour of the Northern Star offer, but noted that board members had indicated how they would propose to vote in relation to their own shares.

The company was obtaining legal advice.