Trek Metals Limited has signed a binding term sheet with Rio Tinto Exploration Pty. Limited (RTX), a Rio Tinto subsidiary, for an option to farm-in over the Jimblebar Nickel-Copper Project.
During an initial option period, RTX may elect to farm-in into the Jimblebar Project with the right to earn an 80 per cent Joint Venture (JV) interest by solely funding $5 million in exploration expenditure.
Under the terms of the binding term sheet, RTX will pay Trek $50,000 upfront for an exclusive initial six-month option to explore the Jimblebar Project but will have the right to extend the option period to 12 months by the payment of an additional $25,000.
The agreement also allows RTX to withdraw from the farm-in at any time after meeting a minimum expenditure commitment of $150,000.
If a party does not contribute its JV share of expenditure, its JV interest will be diluted, with deemed project value based on total expenditure from the start of the farm-in period.
Additionally, Trek Metals said if a party’s JV interest falls below 10 per cent, the other party may buy out their interest at an independently determined fair market value, or the JV interest otherwise converts into a 0.5 per cent net smelter return royalty on the first 10 years of commercial production.
Trek CEO Derek Marshall said the company is looking forward to collaborating with RTX as it brings significant technical and operational expertise that will help teams generate, refine and test targets across tenements.
“This agreement allows Trek to continue to focus on our flagship Tambourah Lithium Project, where we plan to commence our maiden drill program this quarter, and continue to advance our high-grade Hendeka Manganese Project, while keeping a free-carried exposure to the nickel-copper potential at Jimblebar and allowing it to progress much quicker than would otherwise be achievable,” he added.
