Australia-based Nickel Mines has inked a binding memorandum of agreement (MoA) with Iriana Mutiara Mining (IMM) for the staged acquisition of a 100% stake in the Siduarsi nickel-cobalt project in Indonesia.

The financial terms of the agreement have not been revealed.

Located in the Papua province, the Siduarsi project is currently in the exploration stage.

Under the terms of the MoA, Nickel Mines has to finance various project milestones. These include a modest exploration programme to be carried over two years, the completion of a JORC-compliant resources statement, as well as a mine feasibility study.

The Australian firm will cover the cost of the exploration programme as part of its due diligence. The amount will be credited towards earn-in expenditure if the company signs a joint venture agreement.

Presently, there is a drill rig on site at the Siduarsi nickel-cobalt project. The rig had most recently completed 253m of drilling across 19 holes into a planned 500m drill programme.

The project is along geo-tectonic strike from the Ramu nickel-cobalt project in neighbouring Papua New Guinea.

The Ramu project has reported mineral resources of 166Mt at 0.90% nickel and 0.10% cobalt and was commissioned in 2012. It is operated by Metallurgical Corporation of China.

Siduarsi, which spans 16,470ha, is a 6th generation contract of work (CoW). It is among the four active nickel CoWs in Indonesia.

Previous works carried out at the nickel-cobalt project included nearly 367 shallow hand and machine soil augurs in addition to 24 drill holes and four test pits.

Nickel Mines managing director Justin Werner called the Siduarsi project to be a potentially large-scale, long-life nickel deposit, which has high associated cobalt grades within a proven geological setting.

Werner said: “The potential to secure this CoW is not only important from a security of supply perspective but also has the added strategic benefit of enhancing our potential ability to participate in further downstream processing opportunities.

“The Company is excited to be able to advance the exploration status of this Project with additional upside potential for the discovery of high grade saprolite pods and other associated elements such as scandium, chromite, iron oxide and aluminium.”