PERTH (miningweekly.com) – ASX-listed Alloy Resources has signed a farm-in and joint venture (JV) agreement with the exploration arm of major Rio Tinto over an exploration licence in the Paterson region of Western Australia.
Under the terms of the agreement, Rio Tinto Exploration could earn a 70% interest in the tenement by either spending A$500 000 over a three year period, or conducting at least 500 m of drilling over the same period.
Rio would be required to spend a minimum of A$133 000 within a 12-month period, before it can withdraw from the agreement, with the miner also obligated to keep the tenement in good standing prior to any withdrawal.
Once Rio has earned a 70% interest in the project area, Alloy could elect to contribute its 30% participating interest, convert its interest into a 1.25% net smelter royalty capped at A$15-million plus a right to receive A$1.5-million prepayment of the royalty, or not to start contributing to the JV, allowing Rio to sole fund expenditure to earn a further 15% interest.
Should Rio continue to sole fund expenditure, the major could spend a further A$1-million to earn the additional 15% interest, bringing its total holding in the project area to 85%.
In that case, Alloy would have a second election to either convert its remaining interest into the royalty, or contribute to the JV expenditure.
In addition to the earn-in funding, Rio has also agreed to reimburse Alloy’s previous A$40 000 cost.