Alloy Resources Strike Farm-In JV with Rio Tinto

THE BOURSE WHISPERER: Alloy Resources (ASX: AYR) has struck a Farm-In and Joint Venture Agreement with Rio Tinto subsidiary, Rio Tinto Exploration Pty Limited (RTX).

Alloy Resources and RTX will join forces to explore Exploration Licence EL 45/4807, located in the Paterson region of Western Australia.

The key terms of the Binding Term Sheet include:

Upon Execution RTX is to reimburse Alloy’s previous costs of $40,000.

RTX has the right to earn a 70 per cent joint venture interest in the Tenement by completing the following within 3 years:

Expenditure of at least $500,000; and
At least 500 metres of drilling on the Tenement.

RTX must spend a minimum of $133,000 within 12 months before it can withdraw and is obligated to keep the Tenement in good standing prior to any withdrawal.

In the event RTX earns a 70 per cent interest, Alloy will have a First Election to:

Commence contributing in accordance with its 30per cent participating interest;
Convert its interest to a 1.25 per cent NSR Royalty capped at $15 million plus a right to receive a $1.5 million prepayment of the Royalty upon a decision to mine; or
Not commence contributing to the joint venture and for RTX to continue to sole fund expenditure to earn a further 15 per cent interest.

“We are pleased to have RTX’s interest in exploring our large exploration area north-west of Telfer,” Alloy Resources executive chairman Andy Viner said in the company’s announcement to the Australian Securities Exchange.

“They have been actively exploring in the region since 2015 and we are hopeful that this intellectual knowledge can accelerate definition of the potential for gold-copper mineralisation within our Tenement.

“The area has some historic first pass copper and gold drill results of interest, however this was from back in the 1990s and we will now benefit from modern exploration techniques and geological models.”