Australia’s Hammer Metals has signed a joint exploration agreement with Sumitomo Metal Mining Oceania, a subsidiary of Sumitomo Metal Mining, to develop the Bullrush Project in north-west Queensland.

The agreement could see Sumitomo earn up to an 80% interest in the project by funding exploration and feasibility studies.

Under the agreed terms, Sumitomo will pay Hammer an initial farm-in fee of A$100,000 ($66,613) within ten days of the agreement signing.

Sumitomo is also committed to funding a 2,000m drilling campaign within the first 12 months.

To earn a 51% stake, Sumitomo must invest A$4.5m over four years. If Sumitomo chooses to invest another A$2m within one year, its stake could increase to 60%.

The agreement further stipulates that upon Sumitomo completing the second farm-in period, Hammer has the option to either contribute proportionally to exploration costs to maintain a 40% interest or allow Sumitomo to increase its stake to 80% by solely funding the pre-feasibility study (PFS).

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This PFS will evaluate the potential for a mining operation, targeting production of at least 100,000 tonnes of copper equivalent metal over the mine’s life.

The Bullrush Project includes sections of the Williams-aged Wimberu Granite, spanning 87km² of the Mount Isa Project area.

The area is characterised by geophysical signatures indicative of iron oxide copper-gold (IOCG) mineralisation.

Hammer managing director Daniel Thomas said: “We are excited to broaden our relationship with Sumitomo Metal Mining Oceania through a new joint exploration agreement covering the highly prospective Bullrush Iron-Oxide-Copper-Gold Project.

“We look forward to further strengthening our relationship in the quest for the development of a large-scale copper and gold mine in the Mount Isa district.

“Bullrush features a large coincident gravity and magnetic anomaly under moderate cover with no previous drilling. The nearby Devoncourt Project (<10km) demonstrates that the large Williams age granite intrusion is a fertile host for copper and gold mineralisation of IOCG style.

“With a commitment to drill this compelling target in the coming year, Hammer and its shareholders have another exciting opportunity to make a breakthrough copper discovery in this world-class metal province.”