LCL Resources (ASX:LCL) has executed a binding tenement sales agreement with Munga River to purchase an exploration licence, EL2566, adjoining the Veri Veri Nickel Project in Papua New Guinea.
Under the agreement, LCL will issue 6.7 million shares to Munga once the transaction is complete and EL2566 has been transferred to the company.
Additionally, LCL will grant Munga a 2% net smelter royalty (NSR) for minerals extracted from EL2566. LCL has the right to purchase the NSR back for a cash payment of $5 million at any time.
LCL will also be required to pay a $5,000 finders fee to a Munga shareholder, and once the transaction is complete, will pay a further $20,000 and issue about 1.34 million shares to the finder.
Under the transaction, LCL can withdraw from the agreement if completion does not occur within 6 months of signing.
EL2566 comprises 2 areas for a total of 303km-square. At a regional scale, the northern area of EL2566 hosts dunite lithologies of the Papuan ultramafic belt of southern Papua New Guinea and is considered to have the potential to host nickel mineralisation.
Meanwhile, the southern region of the licence is considered to be prospective for copper and gold mineralisation.
LCL has begun a detailed review of historical data associated with EL2566 and says it will provide further details of targets and prospectivity.
The Veri Veri Project is located 100km east-southeast of Port Moresby and 50km northeast of Kupiano port.
LCL Resources is an ASX-listed exploration and mining company that holds 3,890km-square of exploration titles in 5 regions of Papua New Guinea prospective for copper, gold, and nickel.
Write to Aaliyah Rogan at Mining.com.au
Images: LCL Resources Ltd
