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Junior explorer Vital Metals will pocket a tidy $15 million in cold hard cash from the sale of a Queensland tungsten project to fellow ASX-listed explorer Tungsten Mining.

Investors applauded the news, with shares gaining over 22 per cent on Wednesday morning.

Vital (ASX:VML) has been waiting for more than 12 years for tungsten prices to rebound from depressed levels to give its development-ready Watershed project in far north Queensland a leg up.

Today the company emerged from a trading halt to reveal it has inked a binding agreement to sell the project to Tungsten Mining (ASX:TGN).

Tungsten Mining made Vital, which prior to the announcement had a market cap of just $14.8 million, an offer it couldn’t refuse.

>> Stockhead tungsten guide: why this tough metal is in demand and which stocks are benefiting

“We were approached by Tungsten Mining and they’ve made us an offer that was above market cap in terms of cash,” boss Mark Strizek told Stockhead.

“So it crystallises value straight away. It was something I think the board had to consider because we have certainly given a red hot go in terms of Watershed.”

VML shares over the past year.
VML shares over the past year.

Mr Strizek says Tungsten Mining, which has a market cap of more than $350 million, has “the fire-power” Vital doesn’t have to get Watershed into production.

“It takes away a lot of execution risk and it allows us to really focus on West African gold,” he said.

The news comes on the back of a review by Vital on how best it can maximise the value of the Watershed project given the success the company has been having at its Bouli gold project.

For the past two years, Vital’s main focus has been on the exploration of gold in Burkina Faso and Niger.

Vital has previously uncovered grades of as high as 157 grams per tonne (g/t) of gold at the Bella Tondi prospect, part of the Bouli project in Niger.

Anything over 5g/t is generally considered high grade for gold.

“It’s something that we could see could generate returns of multiples of where our share price is,” Mr Strizek said.

Vital says the proceeds from the sale will enable it to maintain an aggressive exploration program in West Africa.

The company will put the sale to a shareholder vote at an upcoming general meeting.