Hammer Metals (ASX:HMX) has secured an option to purchase 80% of the privately held Corella Valley Corporation’s granted Lady Jenny mining leases in Queensland.
Lady Jenny lies near Hammer’s defined resources within its Mount Isa copper-gold portfolio. It is considered a historic copper and gold mining operation, covering 26 hectares, and the area’s copper trend appears to plunge shallowly to moderately north-north-east into Hammer’s surrounding exploration permit.
Under the option agreement, Hammer Metals will pay an option fee of $100,000 and $50,000 in shares. The company has been given a 24-month option period, which will allow it to accurately define the size and grade of a potential resource on the property, with a $500,000 payment to secure the 80% interest in the project.
Hammer Metals, which has a market capitalisation of $33.68 million, will be responsible for the costs associated with exploration until the purchase is completed.
Once completed, Hammer and Corella will be responsible for their pro-rata expenditure, or be diluted based upon a standard joint venture dilution formula.
Should Corella’s interest be diluted to less than 5%, their interest will convert to a 1% net smelter royalty.
Managing Director Daniel Thomas (pictured right) says the mining lease’s region delivers substantial opportunities associated with historical mining operations.
“As we’ve seen with neighbouring projects, the propensity for these historical mines to deliver high-grades of copper from close to surface offers Hammer an advanced exploration opportunity,” Thomas says.
“The Lady Jenny mining lease is entirely complementary to our established exploration tenure and our existing hub copper-gold resources at Kalman, Jubilee, Lakeview, Elaine, and Overlander.
“The establishment of another potential source of ore for a regional processing mill represents another piece of the Mount Isa Inlier puzzle and will ensure that Hammer’s already substantial resource inventory continues to grow.”
Thomas adds that as the region looks to establish the next set of mines to replace the Mount Isa copper operation, advanced prospects like Lady Jenny will have an opportunity to deliver the mines of tomorrow.
“The added bonus of this project is that it is located on a granted mining lease, with Hammer Metals holding all of the tenure surrounding the established mine,” he says.
Subject to due diligence and receiving all necessary approvals, Hammer Metals intends to kick off drilling to test the copper sulphide mineralised zone within Lady Jenny towards the end of this month.
The company expects drilling to pave the way for a release of a resource estimate at the prospect sometime next year.
Hammer Metals holds a 3,000km2 land position within the Mount Isa mining district. The company is primarily focused on discovering copper, gold, molybdenum, and cobalt.
Write to Aaliyah Rogan at Mining.com.au
Images: Hammer Metals
