Raiden Resources has signed an MOU with First Quantum Minerals Australia covering the Mt Sholl project rights in the Pilbara region of Western Australia.
As per the MOU terms, First Quantum can earn an option to acquire up to a 70% interest in the Mt Sholl Ni-Cu-PGE project.
It can acquire the stake through staged investments in the project, and after achieving certain technical milestones and making milestone payments to Raiden.
In the coming months, Raiden and First Quantum will sign a binding agreement with terms consistent with the MOU.
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The exploration activities will take place over an eight-year period, during which time First Quantum is expected to spend a minimum of $25m ($38.15m) and Raiden will receive up to $10m in staged payments.
In the first stage, First Quantum will have 12 months of exclusive time to conduct due diligence on the project.
After executing a binding agreement, it will need to hit minimum expenditure requirements to ensure that all the project licences remain in good standing.
It will need to conduct ground-based electrical geophysical programmes at the project site and support and finance select metallurgical studies.
It also needs to spend a minimum of $1.5m of agreed expenditure for in-ground programmes and studies and pay $250,000 to Raiden for reimbursement of costs.
In the second stage, First Quantum can opt to purchase a 51% interest in the project by completing a joint venture (JV) agreement with Raiden within three months of the beginning of this stage.
It also needs to meet all tenure expenditure with a minimum annual in-ground expenditure of $2.5m. In this stage, it needs to spend a total of $12m on exploration activities, which includes allowable administrative expenses within three years of entering the stage.
It will also need to pay $750,000 to Raiden for the JV agreement. At this juncture, First Quantum can opt out of the project.
If it selects not to proceed to the third stage or fails to meet the conditions in third stage, its stake will revert to 49% and Raiden will obtain a 51% stake in the project.
In the third stage, First Quantum can opt to earn a 70% stake in the project.
It will need to achieve a minimum annual in-ground expenditure of $3m and a total expenditure of $25m on exploration activities, including all administrative expenditure within four years of entering the stage.
Raiden must also be paid $4m in equal instalments annually from the beginning of this stage, in addition to a final cash payment of $5m at the end.
After successfully completing the third stage and acquiring a 70% stake, First Quantum will have to maintain all the licences and should announce a decision to mine.
Raiden will also have a six-month period to co-contribute on a pro-rata basis on its 30% interest or reduce its stake to 20%, whereby First Quantum can further acquire a 10% stake in the project.
Raiden managing director Dusko Ljubojevic said: “This transaction is in line with our stated objective of generating maximum value for shareholders from our entire portfolio of projects, while management’s key focus remains the realisation of value from the LCT [lithium-cesium-tantalum] projects in the Pilbara. The Mt Sholl project is the largest, and currently the only open-pitable, Ni-Cu-PGE sulphide resource in the district and may have the potential to unlock a district-scale opportunity for development.”