Diversified miner South32 will fund exploration activities for AusQuest’s projects for a further two years as the companies work together to develop a pipeline of exploration opportunities in Australia.

South32 and AusQuest have extended their existing strategic alliance agreement (SAA) until December 31, 2025, the junior reported on Wednesday.

The SAA established a framework under which AusQuest uses its expertise to target new deposits and mineral provinces with major ore potential to generate and secure prospective early-stage exploration opportunities that are offered exclusively to South 32.

“The extension of the SAA is a strong endorsement of AusQuest’s credentials and technical skills, and is a vindication of the quality and scale of the projects we have been able to consistently bring to the table over the past seven years,” said MD Graeme Drew.

Under the SAA, projects secured by AusQuest and offered exclusively to and accepted by South32, undergo a staged evaluation process which sees projects classified as either exploration opportunities or drill-ready opportunities. If a project is rejected twice by South32, at either the exploration or drill-ready opportunity stage, it becomes a rejected property and will no longer be the subject of the SAA.

For exploration opportunities, work programmes and budgets to advance each project to a drill-ready stage are agreed by the parties with South32 providing the necessary funds to complete the programmes. All funding to advance projects to a drill-ready stage form part of the total earn-in expenditure of $4.5-million for South32 to acquire a 70% interest in each project.

Once a project is accepted by South32 as a drill-ready opportunity, South32 can elect to earn a 70% interest in the project. AusQuest must prepare a drill programme and budget of at least $500 000 in value and following agreement on the programme, a joint venture (JV) may be established, and a JV agreement entered into on the key terms and conditions set out in the SAA.

AusQuest will continue to be the initial operator for each JV.

Under the agreed JV terms, South32 must contribute a total $4.5-million to earn a 70% JV interest and can earn an 80% interest in each project by completing a prefeasibility study.

The SAA also includes an arrangement to incentivise AusQuest’s project generation activities, with South32 agreeing to pay AusQuest a $300 000 bonus generation fee if at least two exploration opportunities are accepted by South32 in a calendar year.

AusQuest also receives an administration fee equal to 15% of expenditure on all projects under the SAA to help cover company overhead expenses and assist with the ongoing requirements for project generation studies.