Farm‐out of Clermont Copper/Gold Project agreed with Metallica Minerals (ASX:MLM), with Metallica to spend minimum of $300,000 before 31 December 2021 to earn 25% interest in Clermont Copper/Gold Project in Central Qld
Diatreme agrees farm‐out on Clermont Copper/Gold Project. (Credit: Adam Radosavljevic from Pixabay)
Emerging silica sands developer and explorer, Diatreme Resources Limited (ASX:DRX) announced today a binding Memorandum of Understanding (MOU) with Metallica Minerals Limited (ASX:MLM) for the Company’s Clermont Copper/Gold Project (EPM 17968). The agreement is subject to Metallica undertaking and being satisfied in its sole discretion with its due diligence concerning the project (30 day period with provisions for extension).
Situated near Clermont, Central Queensland, the Clermont project (EPM 17968) is prospective for porphyry and stratabound bulk tonnage copper/gold deposits along with mesothermal gold deposits. The project area covers numerous prospects, including the Rosevale Project and the historic Peak Downs copper mine.
Welcoming the agreement, Diatreme’s CEO Neil McIntyre said: “Clermont is a highly prospective project that has potential for the discovery of copper and gold deposits, having hosted historic copper mines.
“Metallica has considerable in‐house expertise in large‐scale, porphyry style deposits and will ensure we maximise the value of this non‐core project for the benefit of our shareholders, while allowing us to focus on developing our flagship Galalar Silica Project.”
MOU Agreement
Under the terms of the MOU, Metallica has the sole and exclusive right to earn:
- a 25% interest in the Project by sole funding exploration expenditure of $300,000 by 31 December 2021 (Minimum Commitment Date); and
- an additional 26% interest in the Project by sole funding exploration expenditure of an additional $700,000 (Further Commitment Amount) by no later than 12 months after the Minimum Commitment Date (Further Commitment Date), (the Earn‐in Requirement). The period to the Further Commitment Date is the Earn‐in Period. Should there be unforeseen delays which affect the ability of Metallica to meet these commitments by the relevant time, the dates may be extended to reflect those delays.
Should Metallica wish to withdraw from the farm‐in prior to funding the Further Commitment Amount, Diatreme will have the right to purchase Metallica’s 25% interest and any associated mining data for $200,000.
With effect on and from Further Commitment Date, Diatreme and Metallica will form an unincorporated joint venture for the purpose of exploration of the Project. Diatreme and Metallica will negotiate the terms of the joint venture agreement which will include the usual provisions for a formal exploration joint venture agreement and will provide that all decisions will be made by simple majority vote, other than for tenement relinquishment which will be unanimous.
Upon Metallica meeting the Earn‐in Requirement, Metallica may elect to sole fund the first $1 million of joint venture expenditure to earn an additional 24% interest in the Project (to give it an aggregate joint venture interest of 75%) (Sole Funding Period). Following the end of the Sole Funding Period (or if Metallica does not elect to sole fund), the parties will contribute to expenditure in the proportions of their joint venture interest.
During the Earn‐in Period, Metallica must keep the Project in good standing.
If Diatreme and Metallica make a decision to mine, the parties will establish a development and mining joint venture (Development Joint Venture) and will negotiate the terms of a joint venture agreement which will include the usual provisions for a formal development and mining joint venture. If Diatreme elects to contribute to development, Diatreme will be granted a 1% NSR royalty for the duration of the Development Joint Venture and Metallica will have an option to buy out the royalty at any time for fair market value. A wholly owned subsidiary of Metallica will manage the Development Joint Venture.
Diatreme has provided Metallica with representations, warranties and indemnities usual for an agreement of this kind.
Source: Company Press Release