Canadian mining company Mega Uranium has signed a non-binding farm in and joint venture term sheet with Cameco Australia, covering some granted tenements and tenement applications in Kintyre Rocks project, located in Western Australia’s East Pilbara region.

The project, owned by Mega’s unit Boxcut Mining, immediately surrounds the lease containing the Kintyre uranium deposit, jointly owned by Cameco and Mitsubishi Development.

Following the latest deal, Mega and Cameco will work towards negotiating and entering into a definitive agreement for the project.

Mega Uranium said establishing a JV with Cameco provides an opportunity to advance the exploration and development of the project with a joint venture partner that has significant uranium exploration and other expertise in the area.

Subject to the negotiation, executive and delivery of a definitive agreement, Cameco will earn an initial 51% interest in the project by sole funding expenditure for exploration activities of A$2m (1.8m) within 24 months from the date of the agreement.

Upon Cameco earning the interest in the project, Boxcut and Cameco will set up a JV to maintain and explore, develop and mine the project.

Cameco will be the operator during the Stage 1 Farm In period and the manager of the JV. Cameco may elect to earn an additional 19% stake in the project by sole funding expenditure for exploration activities of A$4m ($3.6m) within four years from the date of the agreement.