Enova jumps at Brazilian rare earths prospect

Enova Mining (ASX:ENV) has entered into a binding option agreement with private individual Rodrigo de Brito Mello (RBM) to acquire a 100% interest in the CODA rare earths prospect in Minas Gerais, Brazil. 

Under the agreement, Enova will pay a non-refundable cash payment of $50,000 which will be paid within 5 days of signing the agreement. 

Prior to the expiry date of the due diligence period, Enova may elect to exercise the option, at which point will be deemed to have entered into an agreement to sell all of its rights and interests in tenements. 

Enova will make a further cash payment of $150,000 and issue 27 million shares to RBM within 5 days after shareholder approval, of which 13.5 million shares will be subject to voluntary escrow for 6 months from the date of issue. 

Enova’s share price had climbed 33.33% today (26 February 2024) to $0.040 as of 11.15am AEDT on the back of the announcement. 

The company says it has not agreed with RBM to commit any initial expenditure for preliminary exploration work on the tenements. Enova has engaged with an expert to undertake a due diligence review of the tenements. 

Managing Director Eric Vesel says the company considers CODA to be the most ‘advanced’ exploration land package it has considered so far, as it offers an opportunity to explore in a ‘highly prospective’ region.

“Once satisfied with our team’s findings from the due diligence, we would seek shareholder approval to proceed with the acquisition. We expect the due diligence will confirm that the southern Coda tenements are potentially walk-up drill targets which will quickly evolve to a resource drilling campaign within several months of the acquisition. 

Enova has already established a network of local expertise and support that will provide good grounding to operate in this progressive mining state. This potential expansion of Enova’s REE IAC land holdings builds on an already exciting and prosperous future ahead.”

RBM are entitled to receive a 2% net smelter return royalty over all minerals produced that are subject of the tenement. Enova will hold the right to buy back up to 50% of the RBM royalty for $200,000 up to one year after beginning commercial production of the minerals. 

If Enova does not start commercial production within 2 years after the date of the final exploration report, the company will pay RBM $20,000 for every 12 months for the first 2 years of default, and $30,000 every 12 months from the third year of default until the start of commercial production on at least one of the tenements. 

To date, 11 shallow auger holes have been drilled within CODA, with the ‘highest’ assaying drill intercept recording 0.5m @ 5,697 parts per million (ppm) total rare earth oxide (TREO) and 1m @ 5,078ppm TREO. 

The CODA prospect covers a 153.3km-square area and is considered prospective for rare earths enriched ionic absorption clay (IAC). 

During the due diligence period, the tenements will be assessed by an expert geologist, experienced in rare earth associated geology. 

Given the magnitude of areas on offer, geological field reconnaissance will focus on recognised/identified targets for investigation. In addition, Enova says a thorough review of the tenements will be undertaken to ensure tenure is secure. 

The company will review findings from the DD report and seek further advice to assess the suitability of the option and if appropriate recommend the acquisition for Shareholder approval. 

Funding for identified exploration targets will also be advised for shareholder approval. Enova says it remains committed to the development of the Charley Creek project with ongoing activities proceeding without disruption. 

The company will also continue to review projects and business opportunities are they arise, it says, as is the case with this option. The market will be kept appraised of developments, as required under ASX Listing Rules and in accord with continuous disclosure requirements.

Enova Mining is an explorer and developer focused on the critical minerals sector. The company’s flagship Charley Creek Rare Earth Project lies 110km northwest of Alice Springs in the Northern Territory. 

As of 31 December 2023, the company had $939,000 cash and cash equivalents at hand, according to its latest quarterly report. 

Write to Aaliyah Rogan at Mining.com.au   

Images: Enova Mining 
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Written By Aaliyah Rogan
Relocated from the East Coast in New Zealand to Queensland Australia, Aaliyah is a fervent journalist who has a passion for storytelling. When Aaliyah isn’t writing stories, she is either spending time with friends and family or down at the beach.