Critical minerals company Tivan (ASX:TVN) has entered into an exploration alliance agreement with US-based metals exploration company EARTH AI to progress target generation at the Sandover Lithium Project in the Northern Territory.
The company says the agreement provides access to ‘innovative’ artificial intelligence (AI) capabilities for targeting and testing deposits. It will also provide project management, drilling, and ‘significant’ anticipated cost savings for exploration activities.
Commenting on the agreement, Tivan Executive Chairman Grant Wilson says: “The exploration alliance with EARTH AI is an instructive step forward for Tivan, and the ideal solution to the highly problematic situation that the board inherited at Sandover. There are clear strategic synergies for Tivan in amplifying its engagement in Central Australia, and deepening relationships with key stakeholders across the territory.
EARTH AI’s proprietary techniques, that are designed to maximise success rates, reduce time spend and lower capital expenditure, also pass through to very favourable terms versus peers in the sector. The alliance has been structured to minimise committed cash flows, retain topside optionality, expedite timeframes, and fully utilise the government support available.”
“The alliance has been structured to minimise committed cash flows, retain topside optionality, expedite timeframes, and fully utilise the government support available”
Upon a qualifying grade drill intersection of any mineral being discovered, EARTH AI will be entitled to a 2% net smelter return royalty (NSRR) for the discovery area. The initial term of this agreement is 4 years, with EARTH AI having the option to extend the term for a further 2 years.
Under the agreement, Tivan will fund up to 100% of the costs of exploration up to a total exploration expenditure amount of US$4.5 million inclusive of drilling costs across the term of the agreement. Exploration activities and budgets will be determined and agreed annually, although Tivan must provide sufficient funding to meet the annual minimum expenditure obligations associated with the tenements.
EARTH AI will be appointed as exploration manager on a cost recovery basis and will oversee day-to-day project management, exploration activities, and permitting, working under a joint technical committee comprising representatives from both companies.
Where Tivan elects not to contribute to certain exploration drilling costs, EARTH AI will instead contribute the whole or part of the costs, and the NSRR will be adjusted up to 3% in the instance EARTH AI funds 100% of exploration drilling costs. Or otherwise adjusted on a straight line basis between 2% and 3% subject to the funding contribution of each company.
The agreement outlines that both companies will be able to acquire the other’s interest in the project if they elect to dispose of it. Both parties may also agree to reduce the NSRR to 1% for a cash payment of US$2.5 million to EARTH AI for each 1% increment.
Tivan is under no obligation to explore, develop, or mine any area subject to a NSRR under the agreement. EARTH AI will have the option to buy all of the tenements that overlap the royalty area by paying Tivan US$1 million plus a 2% NSRR if a mineral resource has not been defined by the second anniversary of a royalty trigger, and mining expenditure falls below US$250,000.
Tivan reports it has begun discussions with EARTH AI on the initial phases of exploration work planned at Sandover. These phases are expected to be completed this year and will provide scope for drilling programs to begin in 2024.
Along with this, Tivan will also apply for funding under the Northern Territory Government’s ‘Geophysics and Drilling Collaborations’ competitive grants program.
Tivan is a critical minerals company focused on the Sandover Lithium project in the Northern Territory. EARTH AI is a US-based metals exploration company focused on metals used in technologically advanced products.
The Sandover project is located 50km southeast of Mount Peake in the Northern Territory and covers an area of about 8,000km-square across 2 tenements. The area is considered prospective for lithium-bearing pegmatites, sediment-hosted copper, and iron oxide copper-gold (IOCG) deposits.
Images: Tivan Ltd & iStock
