Australian miner Firetail Resources (FTL) has signed a binding term sheet to purchase up to 80% stake in the Peruvian copper projects of compatriot mining company Valor Resources.
Under the agreement, FTL will acquire up to 80% of Valor subsidiary Kiwanda, which owns the mining concessions for the Picha and Charaque copper projects.
Picha is a copper-silver exploration project, located in the Moquegua and Puno Departments of southern Peru.
The project has 27 mining concessions that cover an area of 200km². It is prospective for multiple styles of copper mineralisation.
Charaque is located 30km north-east of the Picha project and has eight claims covering an area around 60km².
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The area around the project is an active exploration area with mining companies such as Barrick, Teck Resources and Fresnillo owning lands.
As a deal consideration, FTL has to pay A$200,000 in cash within five days of executing the agreement. The amount will be refundable if it cannot complete its obligations.
Once the obligations are complete, it will pay another A$550,000 in cash. Subject to approval of shareholders, the firm will issue 15 million shares at A$0.10 apiece, to acquire an initial 60% interest in Kiwanda.
This will be followed by another 20 million performance rights convertible into Firetail shares, for acquiring an additional 20% stake in Kiwanda.
As part of the deal, Valor executive chairman George Bauk will gain a seat on FTL’s board as a non-executive director.
FTL executive chairman Brett Grosvenor said: “This acquisition has strategic importance to Firetail as it complements our existing assets and provides near-term exposure to the copper market with drilling commencing in the short term with an experienced ‘ready to go’ team in Peru.
“The Picha Project is drill ready following a significant exploration programme undertaken over the past 18 months, which has identified large numbers of significant targets through surface work coupled with IP/Resistivity surveys.
“The structure of the deal is complementary to all parties involved and ensures that development of the assets is aligned with the vendor and company strategic directions whilst providing a cash-neutral purchase position to FTL shareholders as we receive a portion of the Charaque farm-in payments over the next four years.”