PERTH (miningweekly.com) − Australia-based explorer Red October could earn a 70% interest in an advanced copper project in Kazakhstan, the ASX-listed company said on Friday.
Red October, which owns the Pardoo nickel project in Western Australia, has a stated strategy to secure precious and base-metals projects in Kazakhstan.
The company agreed to pay UL-TAU K (UTK) a $250 000 fee option for a three-month exclusive period to conduct a due diligence on the Yellowstone copper project, and to negotiate a formal joint-venture agreement.
Under the formal agreement, Red October would have the right to purchase a minimum 10% interest in the Yellowstone project, for $14-million, and up to 70% of the project, for $1,5-million per percentage point.
During the three-month exclusivity period, Red October would fund the conversion of the historical exploration data at Yellowstone into a Joint Ore Reserves Committee- (Jorc-) compliant category, as well as carry out confirmation drilling to assist in the Jorc resource category.
The company would also carry out a desktop prefeasibility study to produce a net present value for development of the project.
“Red October is delighted to have identified such a world-class copper project at this early stage of our development,” said MD Ross Smith on Friday.
“Our immediate priority is to establish a Jorc-compliant resource for Yellowstone by the end of June and progress metallurgical test work.”
Smith added that based on the extensive previous diamond drilling campaigns at Yellowstone, the company believed that this could be a company-making asset. “This is without a doubt a decisive step towards our goal of delivering shareholder value by aggressively acquiring a portfolio of world-class precious and base-metals projects in Kazakhstan.”
The Yellowstone project comprises four discrete zones of chalcopyrite mineralisation, of which two have Russian-style mineralisation reported on them. However, Red October was currently unable to report this mineralisation to market during the exclusivity period.
“Yellowstone is very close to China where much of the equipment is likely to be sourced at lower cost, and there is good local infrastructure which should further help keep costs down,” said Smith.