Alderan Resources Limited (ASX: AL8) has entered into an Earn-in and Joint Venture Agreement with Rio Tinto subsidiary Kennecott Exploration Company covering the company’s Frisco project in Utah, USA.
Peter Williams, Managing Director of Alderan, said the Earn-In Agreement with Alderan’s wholly owned subsidiary Volantis Resources Corp will provide a significant source of funding and exploration expertise to unlock the potential of the Frisco project.
Alderan’s Frisco Project in Utah, USA is a historical mining district encompassing numerous historical mines including the Cactus breccia pipe hosted copper-gold-silver deposit, the Imperial skarn hosted copper-zinc deposit and the Horn Silver Mine, a historical high-grade lead-zinc-silver producer.
Alderan is delighted to have Kennecott as a partner in the exploration of Frisco, which we see as a validation of the prospectivity of the project and a major step forward in unlocking the potential of the area. We look forward to sharing details as the first exploration program progresses,” Mr Williams said.
Key terms of the Agreement include”
Kennecott has the option to sole fund a three-stage earn-in totalling US$30 million as follows:
- Option 1 – 4-year option to acquire a 55% undivided interest in the Project by incurring US$6 million of expenditure within four years of the anniversary of the Agreement, with a minimum of US$1 million to be expended within the first 18 months.
- Option 2 – if Kennecott exercises Option 1, a further option to acquire an additional 10% undivided interest (for a total of 65% undivided interest), by incurring an additional US$9 million in the three-year period after Option 1 has been exercised.
- Option 3 – if Kennecott exercises both Options 1 and 2, a further option to earn an additional 5% undivided interest (for a total of 70% undivided interest) by incurring an additional US$15 million in the three-year period after Option 2 has been exercised.
At any time after Kennecott expends the initial expenditure of US$1m, it may elect to withdraw from the Project with no interest earned and no further rights and obligations.
Kennecott has the right to elect to form a joint venture at any time following the satisfaction of Option 1, in which case each party will contribute to project expenditure in proportion to their respective ownership interest at that time.