Rio Tinto subsidiary Rio Tinto Mining & Exploration has signed an agreement to earn into Sipa Resources’ Kitgum Pader base metals project in Northern Uganda.
Rio Tinto will be required to provide up to $57m towards exploration costs under the deal, as well as offer a further $2m in cash payments in various stages in order to acquire a 75% interest in the nickel-copper project.
The joint venture (JV) agreement is subject to the completion of due diligence by Rio Tinto within three months of the signing date.
The Kitgum-Pader project includes two new mineral discoveries, Akelikongo nickel-copper sulphide and Pamwa lead-zinc-silver.
Sipa is slated to leverage the agreement to fast-track its nickel-copper exploration activities within the broader Kitgum Pader project area.
The deal is also expected to facilitate the evaluation of the Akelikongo discovery.
Sipa Resources managing director Lynda Burnett said: “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.
“The intrusive-hosted, chonolithstyle mineralisation at Akelikongo has so far been defined over a strike length of at least 500m and remains open, with recent drilling having returned some significant thick zones of disseminated and semi-massive nickel sulphide mineralisation.”
While the due diligence is in progress, Sipa intends to carry out initial exploration activities such as a detailed gravity survey over prospective ultramafic intrusive complexes, in addition to drilling works later this year.
Sipa also noted that the mineralisation at Akelikongo resembles that of intrusive-hosted nickel orebodies such as Nova, Raglan and Voisey’s Bay.
The JV project is expected to benefit from Rio Tinto’s mining expertise.
The deal also grants Rio Tinto the right to become manager of the project after 18 months of the commencement of the agreement.