Aeon Metals signs Letter of Intent with Rio Tinto Exploration

THE BOURSE WHISPERER: Aeon Metals (ASX:AQR), which used to be known as Aussie Q Resources, has signed a Letter of Intent (LOI) with Rio Tinto (ASX:RIO) subsidiary Rio Tinto Exploration (RTX).

The LOI sets out terms in regard to a proposed earn-in and Joint Venture of Aeon’s 100 per cent-owned tenement EPM 17060 and all data, reports and any other assets held by the company related to the tenement.

The tenement in question borders Aeon’s Greater Whitewash project tenement, which is situated along the porphyry geological north-south structure.

 

Source: Company announcement

 

“The proposed earn-in and joint venture with RTX will allow AQR to focus its exploration and development on the Greater Whitewash, John Hill and Kiwi Carpet projects along strike to the north, while allowing RTX’s geological team to explore along strike to the south.,” Aeon Metals explained in its ASX announcement.

Aeon has granted RTX a 60 business day exclusivity period, during which the parties intend to negotiate and execute an Exploration and Earn-In Joint Venture Agreement for the exploration and evaluation of the project.

Key indicative terms as outlined in the LOI are as follows:

Phase 1 Period – Exploration:

RTX is to sole fund an exploration program and any associated expenditure to a minimum of $200,000 within 12 months prior to any withdrawal.

Phase 2 Period – Earn-In:

Upon satisfaction of the Phase 1 commitment, RTX shall, within 20 Business Days, make a decision to conduct further exploration on the tenement or terminate the Joint Venture agreement.

If RTX elects to conduct further exploration then Aeon will extend its exclusive exploration rights to the project for a further period of thirty-six months from the date of such election.

RTX will commit to a total expenditure of $2.5 million over the Phase 2 Period to earn its initial interest.

Upon RTX satisfying the Phase 2 commitment, the two companies will form an unincorporated Joint Venture to continue the project with the following participating interests:

–    RTX: 70 per cent; and

–    Aeon: 30 per cent.

Phase 3 Period – Pre-Feasibility:

Within thirty days of formation of the JV, Aeon must notify RTX whether or not it will contribute its share of future funding of the project on a pro-rata basis, as per the parties’ participating interests in the JV.

If Aeon elects not to contribute its share of future funding, RTX will have no further obligation to fund the project but may elect, in its sole discretion, to continue to sole fund the project, in which case it will commit to:

–    expenditure of $15 million; or

–    completion of a pre-feasibility study, whichever occurs first, within a period of five years from the satisfaction of the Phase 2 commitment  to earn an additional 20 per cent interest.