NQ2 drill core from drill hole VUD 15

Tasman Resources inks conditional farm-in and JV with Fortescue

Perth based Australian exploration company Tasman Resources Ltd (ASX: TAS) has announced the execution of a conditional, formal Farm-in and Joint Venture Agreement with FMG Resources Pty Ltd, a subsidiary of Fortescue Metals Group Limited.

The agreement is over Tasman’s wholly owned Exploration Licence 5499 that hosts the Vulcan iron oxide-copper-gold-uranium prospect in South Australia.

As per the agreement, Fortescue will gain an initial 51% stake in Vulcan by spending A$4 million on exploration expenditure within three years.

Three exploration licences

Tasman Resources Ltd currently holds three Exploration Licences on the Olympic Province of the Stuart Shelf in South Australia.

This Province contains the Olympic Dam, Prominent Hill, and Carapateena iron-oxide associated copper-gold-uranium (IOCGU) deposits and is considered highly prospective for further discoveries.

Tasman’s Exploration Licence EL 5499 is the subject of the Farm-In and Joint Venture agreement with FMG.

Licence EL 5499

EL 5499 adjoins the tenement containing BHP Billiton’s giant Olympic Dam deposit and contains two demonstrated IOCGU systems, Vulcan and Titan, as well as other prospects.

Tasman has been exploring the region for a number of years. The most encouraging results have been obtained within EL 5499 at the Vulcan Prospect, where a new, potentially very large IOCGU system has been intersected in all 17 holes drilled to date.

Part of Lake Torrens Project

Tasman’s 100%-owned Lake Torrens Project is a very large and strategic tenement holding (over 1,300 km2) adjoining BHP Billiton’s world class Olympic Dam deposit in central South Australia.

The Vulcan prospect is a part of Lake Torrens Project and is located about 30km north of Olympic Dam. Vulcan is a very large IOCGU system, where drilling to date has intersected a number of very thick intervals of alteration and low grade mineralisation over a large target area of about 12km2.

About Fortescue Metals Group

Fortescue is one of the largest global iron ore producers and is headquartered in Perth, Western Australia. Fortescue owns and operates integrated operations spanning three mine sites in the Pilbara, the fastest, heavy haul railway in the world and the five berth Herb Elliott Port in Port Hedland.

FMG Resources Pty Ltd, formerly known as Iron Ore Australia Pty Ltd operates as a subsidiary of Fortescue Metals Group Limited.

Farm-in, JV with Fortescue

Tasman Resources reported that it has signed a conditional Farm-in and Joint Venture Agreement over its Vulcan Exploration Licence 5499 adjoining BHP’s Olympic Dam tenement in South Australia, with FMG Resources Pty Ltd.

Tasman noted that the Agreement is conditional on South Australian ministerial approval. Fortescue will be the manager both while earning its interest and during the Joint Venture.

51% Interest for Fortescue

According to the terms of the agreement, Fortescue may earn a 51% beneficial interest by sole funding A$4 million plus GST on exploration expenditure within a 3 year period.

However, Fortescue must expend a minimum of A$1 million before it can withdraw. If Fortescue withdraws before expending A$4 million it will earn no interest.

Potential increase to 80%

The agreement states that after earning a 51% interest, Fortescue may at its election, increase its Joint Venture interest to 80% by sole funding a further A$7 million plus GST on exploration expenditure within a further 5 year period.

Nevertheless, in case Fortescue withdraws before expending the further A$7 million, its interest will remain at 51%.

The expenditure clause

The agreement states that after Fortescue has ceased to sole fund the exploration expenditure, all parties must contribute to Joint Venture expenditure proportionally to their Joint Venture interests from time to time.

Alternatively, they also may elect to not contribute, in which case its Joint Venture interest will be diluted in accordance with standard industry dilution provision.

The agreement also states that if the interest of either party in the Joint Venture falls below 10%, the other party has the right to purchase all of that interest at 90% of its then fair market value.

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Written By Christopher Norris
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