PERTH (miningweekly.com) – Gold and base metals explorer Sipa Resources has inked a A$12-million farm-in agreement with the exploration arm of major Rio Tinto over its Paterson North copper/gold project, in Western Australia.
Under the terms of the farm-in and joint venture (JV) agreement, Rio will commit a minimum exploration spend of A$3-million within a two-and-a-half-year period. By spending a further A$3-million, the major will secure a 55% interest in the project.
By taking its total spend to A$12-million, Rio’s stake in the JV will increase to 70%. The mining major could earn an additional 10% interest in the project by sole funding exploration expenditure to the earliest of a Joint Ore Mineral Resource valued at more than A$1-billion, or the completion of an order of magnitude study on the mineral deposits.
Additionally, Rio will also subscribe for A$250 000 worth of Sipa shares.
“Attracting a global major such as Rio to farm-in to the Paterson North project reflects both the enormous potential of the ground and the quality of the work which the Sipa exploration team has completed over the past five years,” said Sipa MD Pip Darvall.
“Furthermore, it strengthens our relationship with Rio Tinto Exploration and endorses the technical capabilities of the Sipa team.”
Darvall told shareholders on Monday that the JV would allow Sipa to accelerate exploration activities through increased expenditure, and to benefit from Rio’s technical expertise and potential operational synergies with the major’s other activities in the Paterson region, including the Winu copper project some 10 km from Paterson North.