Terramin Australia Limited (ASX: TZN) has entered into an agreement with JOGMEC (Japan Oil, Gas and Metals National Corporation), a Japanese government Independent Administration Institution, for exploration of the South Gawler Ranges Project (SGRP) in South Australia under which JOGMEC has the right to earn 70% by expending A$7.5M over a six-year period.
SGRP covers approximately 4,524 sq. km and is located c.100km west of Port Augusta and 185km southwest of OZ Minerals Limited’s Carrapeteena Copper-Gold Mine that hosts 950Mt at 0.75% Copper and 0.25g/t gold.
The SGRP is an underexplored, highly prospective multi-commodity asset with potential to host significant Iron Oxide Copper Gold (IOCG) mineralisation alongside epithermal Ag-Pb-Zn deposits, tin-tungsten and copper gold skarns along with potential porphyry systems.
The Project includes the Menninnie Dam and Viper Deposits which hosts a JORC 2004 compliant inferred resources totalling 7.7Mt at 5.7% Zn+Pb and 27g/t Ag at a 2.5% Zn-Pb cut-off and remains open at depth and along strike.
Hematite-rich hydrothermal breccias comparable to those in the Olympic Dam IOCG deposit crop out at several localities in the SGRP and are yet to be drill tested.
Commenting on the Agreement, Terramin’s Executive Officer Martin Janes, said:
“The Terramin Exploration team is excited that JOGMEC shares our vision on the potential of the South Gawler Ranges Project where geochemically anomalous epithermal alteration, veins and breccia outcrops, and associated geophysical features, indicate the potential for near-surface large tonnage IOCG deposits comparable in size to Carrapeteena.”
“The increased exploration funding enables an accelerated exploration program on the Project, thereby maximising the chances of a significant return to Terramin from this non-core asset.
“The ability for Terramin to attract a quality partner such as JOGMEC supports Terramin’s approach to early-stage exploration and prospect generation.”
The material terms of the SGRP exploration agreement are:
▪ JOGMEC to fund A$7,500,000 in exploration expenditure across a three stage earn-in:
- Stage 1: JOGMEC will have the option to acquire a 30% interest in the Project by sole funding A$1,500,000 up to the period ending 31 March 2024
- Stage 2: JOGMEC will have the option to acquire a further 21% interest in the Project (total 51% interest) by sole funding an additional A$2,000,000 up to the period ending March 31, 2026
- Stage 3: JOGMEC will have the option to acquire a further 19% interest in the Project (total 70% interest) by sole funding an additional A$4,000,000 up to the period ending 31 March 2028 (collectively referred to as the JOGMEC Earn-in Option).
▪ JOGMEC must sole fund A$500,000 exploration expenditure on account of its Stage 1 Earn-in obligation by 31 March 2023 (Minimum Expenditure Commitment).
▪ Within 365 calendar days of JOGMEC completing Stage 3 of the JOGMEC Earn-In Option, JOGMEC can elect to purchase an additional 6% interest in the Project (total 76% interest), by paying A$3,000,000 and granting a 0.5% net smelter royalty (NSR) to Terramin (Purchase Option). JOGMEC can elect to buyback the 0.5% NSR by paying Terramin A$1,500,000 within 365 calendar days of JOGMEC exercising the Purchase Option.
▪ Terramin assumes Operatorship of the Project during the Stage 1 and Stage 2 Earn-in Period. The Management Committee will appoint the Operator of the Project during the Stage 3 Earn-in Period.
▪ If Terramin’s or JOGMEC’s interest in the Project dilutes to below 10%, this converts to a 1% NSR royalty.
▪ JOGMEC’s participation in the exploration agreement is subject to Foreign Investment Review Board approval.
