Hammer Metals (ASX:HMX) has executed an earn-in agreement with South32 (ASX:S32) under which its subsidiary, South32 Group Operations, can earn an 80% interest in the Isa Valley Project in north-west Queensland.
The Isa Valley Project covers sections of the Mount Isa Fault and spans 320km2 of Hammer’s broader 2,800km2 Mount Isa Project. The area is considered prospective for Mount Isa-style sedimentary lead-zinc-copper mineralisation.
Under the three-stage earn-in deal, South32 must first complete an ionic-leach soil sampling and field assessment of the tenement — costing between $20,000 and $25,000 — within six months.
Stage two includes South32 funding expenditure for a drilling program approved by a Technical Committee, encompassing 900m of drilling, subject to an expenditure cap of $150,000. This has to be completed within 12 months of starting this stage.
Finally, stage three comprises South32 funding $3 million of exploration expenditure over a three-year period. South32 may extend the earn-in period for an additional 12 months.
If the period is extended, South32’s expenditure commitment will increase to $4 million.
Once completed, South32 will have earned a 70% interest in the project and a joint venture will be formed.
South32 may earn an additional 10% interest in the joint venture by sole funding a Pre-Feasibility Study for a mine development on the tenement area and any other joint venture expenditure.
At either the conclusion of stage three or the completion of a Pre-Feasibility Study, each party can elect to contribute to exploration expenditure on a pro-rata basis in accordance with its interest.
Hammer Metals Managing Director Daniel Thomas says attracting another quality partner such as South32 supports the company’s approach in identifying early-stage exploration targets and prospect generation.
“This earn-in will cover ground that Hammer applied for in 2021, along the highly prospective Mount Isa Fault,” he says.
“We look forward to leveraging their knowledge in exploration for large-scale base metal deposits.”
Initial exploration work at Isa Valley will focus on completing the ionic-leach soil sampling. The aim of the sampling program is to find mineralisation at depth emanating from prospective Mt Isa group sediments present in the project area abutting the Mount Isa Fault.
Hammer will continue to progress exploration across its wholly owned and other joint venture properties in the Mt Isa district. Upcoming field work at the Mount Isa Project includes diamond drilling.
South32 is a globally diversified mining and metals company focused on developing natural resources. The company produces bauxite, alumina, aluminium, copper, silver, lead, zinc, nickel, metallurgical coal, and manganese.
Write to Aaliyah Rogan at Mining.com.au
Images: iStock
