Shares in Sipa Resources soared today after the company announced a joint venture agreement with mining giant Rio Tinto at the junior explorer’s Kitgum-Pader base metals project in northern Uganda.
Shares in Sipa Resources soared today after the company announced a joint venture agreement with mining giant Rio Tinto at the junior explorer’s Kitgum-Pader base metals project in northern Uganda.
Under the agreement, Rio can earn up to a 75 per cent interest in the project by spending $US57 million ($75 million) on exploration costs, along with a $US2 million cash payment.
Sipa shares were up 62.5 per cent at 1.3 cents each at 2pm AEDT.
The first stage of the earn-in agreement comprises a $US12 million exploration expenditure within five years, including a minimum commitment of $US2 million to earn a 51 per cent stake in the project.
The second stage requires an additional $US15 million exploration spend over a three-year period to earn a 65 per cent interest.
For a 75 per cent stake in the project, Rio needs to spend an extra $US30 million on exploration, or declare a JORC resources containing at least 250,000 tonnes of contained nickel within three years.
Additionally, Rio will make cash payments totalling $US2 million, which include two $US250,000 payments, followed by a $US1.5 million payment at the start of stage two.
The agreement is conditional on due diligence.
Sipa will initially managing exploration activities with Rio holding the right to take over as manager after 18 months.
A management committee made up of two members from each company will oversee key project related decisions.
Sipa managing director Lynda Burnett outlined the significance of the agreement.
“This is a company-defining transaction for Sipa, which vindicates our long-term focus on pursuing opportunities to discover new world-class base metal and gold-copper deposits within emerging mineral provinces with Tier-1 potential,” she said
“Attracting a global major such as Rio Tinto to farm-in to the Kitgum Pader project reflects both the enormous potential of the ground and the quality of the work which the Sipa exploration team has completed over the past five years.”
The Kitgum-Pader project contains two new mineral discoveries – Akelikongo nickel-copper sulphide and Pamwa lead-zinc-silver, both made by Sipa during 2014 and 2015.
The intrusive-hosted nickel-copper sulphide mineralisation at Akelikongo is one of the most significant recent nickel sulphide discoveries globally, exhibiting strong similarities to major intrusive-hosted nickel orebodies such as Nova, Raglan and Voisey’s Bay.
In Australia, Sipa has a JV agreement with Ming Gold at the Paterson North copper gold project in Western Austra;ia.
