Renascor Resources Limited (ASX: RNU) has entered into a binding farm-in and joint venture agreement regarding South Australian exploration licenceEL-5586 with Rio Tinto Exploration Pty Limited.
Under the terms of the agreement, Rio Tinto Exploration may earn an 80% interest in EL-5586 by making staged payments to Renascor of $200,000 over a two year period, and, subject to electing to continue exploration, sole funding exploration expenditure on EL-5586 of $3 million within five years of the date of the farm-in agreement.
Renascor Managing Director, David Christensen, said Rio Tinto Exploration will manage exploration programmes and be responsible for maintaining statutory expenditures during the earn-in period.
In the event that Rio Tinto Exploration meets the earn-in requirements, a joint venture will be formed between Rio Tinto Exploration and Renascor, with both parties contributing on a pro rata basis (80% Rio Tinto Exploration, 20% Renascor).
The parties also have the right to dilute their respective interests, and if either party’s interest falls below 5%, the interest will convert to a 1.25% net smelter royalty on the first 12 years of production.
Renascor will retain a 100% interest in the remaining Marree Project exploration licences, EL 6170 and EL 6403, in South Australia.
We are delighted that Rio Tinto Exploration has agreed to commit its considerable resources and expertise toward exploring EL 5586 and that Renascor shareholders will have an opportunity to benefit from the discovery potential of this highly prospective, but underexplored exploration prospect,” Mr Christensen said.
“This agreement is consistent with Renascor’s strategy of maximising the value of our significant pipeline of exploration projects in South Australia, while dedicating our resources towards advancing core projects with near-term potential to offer significant value uplift.”
With the completion of a recent capital raising, Renascor has a healthy cash balance of approximately $5.2 million as of September 30, 2020.
Renascor’s current activities are focused on its 100%-owned Siviour Battery Anode Materials Project and Carnding Gold Project.
The Marree Project is made up a large, copper-prospective ground position within South Australia’s Adelaide Fold Belt. Renascor’s exploration programme has been focused on identifying and drilling prospects for potentially large tonnage Zambian Copper Belt-style, sedimentary copper deposits.
The sedimentary sequences of the Adelaide Fold Belt have long been recognised as distinctly analogous to the copper-rich Zambian Copper Belt, offering prospects for large tonnage sedimentary copper deposits.
In the 1970s and early 1980s, some significant exploration programs adopted the Zambian-style sedimentary copper model within Renascor’s current project area, resulting in intersections of significant ore-grade copper in areas identified from detailed geological mapping and geochemical targeting.