South32 and AusQuest extend exploration agreement

According to Mining News Pro - Under the SAA, projects secured by AusQuest and offered exclusively to, and accepted by, South32, undergo a staged evaluation process that will see the projects classified as either exploration opportunities or drill-ready opportunities.

For exploration opportunities, work programmes and budgets to advance the project to a drill-ready stage are agreed upon by the parties, with South32 providing the necessary funds to complete the programmes. All funding to advance the project to a drill-ready stage will form part of the total $4.5-million earn-in expenditure to give South32 a 70% interest in each project.

Under the SAA, South32 must contribute a total of $4.5-million on each project to earn a 70% stake, and could increase this stake to 80% by completing a prefeasibility study on each project.

Six of AusQuest’s projects are currently classified as exploration opportunities under the SAA, with three in Australia and a further three in Peru, with two of these projects subject to drilling activities and one to a joint venture arrangement.

The SAA is focused on targeted projects, including copper, zinc and nickel projects in Australia and Peru, but could include other mineralisation styles and jurisdictions, as agreed upon.

AusQuest MD Graeme Drew said on Tuesday that the extension of the SAA was a fantastic outcome for the company and its shareholders.

“The agreement is structured to provide AusQuest with the financial capability to identify and evaluate opportunities as well as rewarding the company for success along the way. The extension of the SAA is clear recognition from South32 about the importance of the relationship with AusQuest and the value it creates for their shareholders.

“It also represents a strong endorsement of AusQuests’ credentials and technical skills, and is a vindication of the quality and scale of the projects we have been able to consistently bring to the table both in Australia and Peru over the past three years.”

AusQuest will now be incentivized through a $300 000 bonus generation fee in the event that at least two exploration opportunities are accepted by South32 within a calendar year, and under the terms of the updated SAA, the junior would also receive an administration fee equal to 15% of monies extended on all projects under the SAA.