Tasman Resources FMG Resources, a subsidiary of Fortescue Metals Group have executed a conditional, formal Farm-in and Joint Venture Agreement over Tasman’s wholly owned Exploration Licence 5499 that hosts the Vulcan iron oxide-copper-gold-uranium prospect in South Australia.
Located approximately 30 kilometres north of BHP’s Olympic Dam mine, the prospect can earn Fortescue a 51 per cent beneficial interest if the company solely funds more than AU$4 million on exploration expenditure within a three-year period.
As per terms of the agreement, Fortescue must expend a minimum of AU$1 million before it can withdraw. If Fortescue withdraws before expending AU$4 million it will earn no interest.
After earning a 51 per cent interest, Fortescue may at its election, increase its Joint Venture interest to 80 per cent by sole funding a further AU$7 million on exploration expenditure within a further five-year period. If Fortescue withdraws before expending this, its interest will remain at 51 per cent.
“After Fortescue has ceased to sole fund the exploration expenditure, all parties must contribute to Joint Venture expenditure proportionally to their Joint Venture interests from time to time or may elect to not contribute, in which case its Joint Venture interest will be diluted in accordance with standard industry dilution provision,” said Fortescue Metals Group in a statement.
Fortescue will be the manager both while earning its interest and during the Joint Venture.
The Agreement is conditional on South Australian ministerial approval.