Pearl Gull’s Cockatoo Island Sale Risks Shareholder Approval and Regulatory Hurdles

Pearl Gull Iron’s Strategic Divestment

Pearl Gull Iron Limited (ASX – PLG) has taken a decisive step by executing a binding agreement to sell its flagship Cockatoo Island Project. The deal, valued at A$4.5 million in cash, also includes a 4% equity stake in Crestlink Pty Ltd and royalties on extracted materials, reflecting a nuanced approach to retaining upside exposure while unlocking immediate capital.

The Cockatoo Island Project, located off Western Australia’s northwest coast, has been a core asset for Pearl Gull, with a rich history of high-grade iron ore mining. However, the company’s board views this transaction as a successful outcome given the early-stage nature of the project and the significant work and expenditure required to advance it further.

Deal Structure and Considerations

The cash component of the sale will be paid in instalments, with an initial A$600,000 already secured and held in escrow, and the balance scheduled through to 12 months post-completion. Alongside this, Pearl Gull will receive a 4% direct or indirect equity interest in Crestlink, the purchaser’s parent company, subject to shareholder approval. Should Crestlink’s valuation remain below A$75 million during future equity raises, Pearl Gull is entitled to additional shares to maintain its stake, though dilution is possible if valuations rise.

Royalties form a key part of the ongoing value proposition, with Pearl Gull entitled to 2% of the free on-board value of iron ore sold and a fixed A$0.50 per tonne royalty on ballast used in Crestlink’s infrastructure development on Cockatoo Island. This arrangement ensures Pearl Gull maintains a financial interest in the project’s future production without the operational burden.

Conditions and Next Steps

The transaction is contingent on several conditions precedent, including shareholder approval expected at a general meeting in late October 2025, ministerial consent for the transfer of mining tenements, third-party consents, and Foreign Investment Review Board (FIRB) approval. These regulatory and corporate hurdles introduce some execution risk, with termination rights for both parties if conditions are unmet by March 2026.

Following completion, Pearl Gull intends to remain listed on the ASX and focus on identifying new projects and growth opportunities, leveraging the proceeds to generate shareholder value. The company has appointed Yelverton Capital Pty Ltd as its corporate adviser to navigate this transition.

Market and Strategic Implications

This divestment marks a strategic pivot for Pearl Gull, shifting from direct project development to a more diversified approach that balances immediate liquidity with retained upside via equity and royalties. For investors, the deal offers clarity on the company’s direction and a potential catalyst for renewed exploration activity funded by the sale proceeds.