PERTH (miningweekly.com) – ASX-listed Australian Mines has exercised its option to acquire the Flemington cobalt/nickel/scandium project, in New South Wales, from fellow listed Jervois Mining.

Jervois in late 2016 optioned the Flemington project to a wholly owned subsidiary of Australian Mines, for A$6-million in cash, of which A$2-million in rolling option payments has already been made.

Jervois said on Monday that Australian Mines' exercise of the option would trigger a final exercise fee of A$600 000, which will be payable immediately. The remainder of the purchase price, which is A$3.4-million, will be payable on the completion of the transaction, which is expected for mid October.

With the exercise of the option, Jervois will hold a 1.5% gross royalty over all the mineral products produced at the Flemington project. This royalty forms part of the royalty package sold to TSX-listed Cobalt 27 in May this year, for $4.5-million.

Australian Mines MD Benjamin Bell said on Monday that the company had progressed the Flemington project to a point where it was now in a position to complete the acquisition, prior to starting its next drilling campaign, and before advancing the project towards a prefeasibility study.

“We remain optimistic about significantly increasing the mineral resource inventory at the project, given that only 1% of the prospective geology at Flemington has been comprehensively evaluated,” Bell said.

“Our early modeling of the cobalt grade, host geology and potential mineral resource tonnage at Flemington has demonstrated significant exploration potential.

“We look forward to getting a drill rig back out on the ground at the project to further evaluate the scale of the opportunity we have with Flemington and potentially develop it into a valuable second production source of cobalt, nickel and scandium for Australian Mines, following our flagship Sconi project in Queensland, where we are nearing completion of a bankable feasibility study.”