Junior explorer BMG Resources (ASX:BMG) has struck an option agreement for the potential $2 million acquisition of a 90% interest in 3 Western Australian exploration licences.
The licences — of which one is granted and 2 are in application — will be dubbed BMG’s Dragon Niobium-Rare Earth Elements (REE) Project, and the landholding abuts WA1 Resources’ (ASX:WA1) ‘world-class’ Luni niobium-REE discovery in the West Arunta region of WA.
BMG, which has a $10.45 million market capitalisation, says the planned Dragon project will cover around 1,470km-square in the West Aruna region, making it one of the largest landholdings in the prolific area.
Under the binding option agreement with privately held Chinese company HJH Nominees, BMG has paid a $30,000 option fee for a 55-day exclusive option period over the exploration licences.
If BMH decides to exercise its option and move forward with the purchase, it will pay the seller $1 million in cash and 40 million BMG shares. From here, BMG will need to pay another $1 million in cash as a deferred consideration once the tenement applications are granted or on the 12-month anniversary of the option completion date.
BMG will also grant HJH a 2% gross production royalty on the tenement area.
Cong Ming Limited acted as BMG’s advisor to the deal and received 25 million unlisted BMG options, exercisable at $0.02 and expiring on 6 February 2026, in return.
BMG Non-Executive Chairman John Prineas says the company is ‘very excited’ by the opportunity to snap up the West Arunta tenements, in an area where the likes of WA1, Rio Tinto (ASX:RIO), and MTM Critical Metals (ASX:MTM) are actively exploring.
“Since listing on the ASX in February 2022 following an IPO of its shares at $0.20 per share, WA1 has been spectacularly rewarded for its exploration success at the West Arunta, with its share price now at $10.006.
The West Arunta is under-explored elephant country where exploration investments have potential to deliver remarkable returns for investors.
BMG’s preliminary review of the tenements under option confirms that they are prospective for carbonatite-hosted niobium and other REE mineralisation.”
“The West Arunta is under-explored elephant country where exploration investments have potential to deliver remarkable returns for investors”
BMG says historical exploration in the West Arunta region has been ‘very limited’ and, as such, systematic exploration using modern methods and techniques could offer an ‘excellent opportunity’ for a new discovery.
Niobium is classified as a critical metal by the Australian government and a strategic metal by the US government. BMG says the primary use of niobium today is to produce ferroniobium (FeNb), which is used as an alloy to strengthen steel.
BMG Resources had $950,000 cash at hand at the end of December 2023, according to its latest quarterly report.
Write to Joshua Smith at Mining.com.au
Images: BMG Resources
