The sale amount is to be paid in two equal tranches of A$2m ($2.06m) as per the terms of the agreement. The first payment is to be made within 5 days of Avalon becoming the registered holder of the permit Rakkurijärvi nr 1 and the discovery exploitation concession application.
The second and final tranche is scheduled within five days of the discovery exploitation concession being granted.
Further, Avalon is mandated to pay a 1.5% net smelter return royalty to an unrelated third party for any future production from the Discovery Zone prospect.
Avalon Minerals managing director Jeremy Read noted that this agreement is a positive outcome for the company and it furthers the economics of the Viscaria copper project.
"The copper-iron mineralization at the Discovery Zone is very similar in nature to the copper-iron mineralization at Avalon’s existing D Zone Mineral Resource.
"A Scoping Study completed late in 2012, suggested that by trucking Discovery Zone ore 10km to Viscaria and processing the ore through the planned Viscaria processing plant, it may add up to A$140M in value to Viscaria, bringing the total project NPV to in excess of US$300M and extending the life of the overall project to 9.5 years," explained Read.
With the execution of HOA, Avalon and Hannans are to complete a Sale and Purchase Agreement by 31 May 2013.
The Discovery Zone prospect is located approximately 6km southwest of Kiruna and approximately 10km from Avalon’s Viscaria Project in Sweden.
It has currently has JORC inferred mineral resource of 10.9million tons at 0.31% copper, 38.7% iron and 0.08g/t gold, reported above a 20% iron cut-off.
