JOHANNESBURG (miningweekly.com) – Gold and base metals explorer Caravel Minerals has signed a farm-in agreement with metals and mining company First Quantum Minerals (FQM) to further develop its Calingiri copper/molybdenum project, in Western Australia.
Under the agreement, FQM – a cornerstone investor in ASX-listed Caravel – could contribute A$3.6-million to ongoing exploration activities to earn a 50.1% interest in the project.
Caravel CE Marcel Hilmer said the agreement represented the third investment by FQM in the project, demonstrating its confidence in the project’s economic potential.
“This is a tremendous vote of confidence in the quality and potential of Calingiri by one of the world’s most successful copper mine developers and producers of the past 15 years,” he said.
“Our recent successful drilling programmes have already established Calingiri as potentially one of the largest bulk tonnage deposits for copper and molybdenum in Australia, with an endowment potential well in excess of 1.4-million tons of copper metal.
“Our focus now is to increase our exploration targets, establish Joint Ore Reserves Committee-compliant resource for the project and to advance Calingiri towards a scoping study,” Hilmer added.
In the first year, FQM would contribute A$1.2-million after which it was entitled to withdraw with no right or interest. It would also have the right to nominate a board member.
The existing convertible loan agreement with a principal balance of A$600 000 would be converted to shares in Caravel at a conversion price of 1.3c, thus extinguishing the debt funding obligations in the company’s books.
The funds would be paid in installments over the period of the agreement on completion of due diligence by FQM and any other regulatory approvals required.