Rio Tinto Exploration, a wholly owned subsidiary of Rio Tinto, has signed a conditional agreement with Tasman Resources for the funding of an accelerated exploration program on Tasman’s 100% owned Exploration Licence 4322 which contains the Vulcan prospect, located 30 km from BHP Billiton’s giant Olympic Dam copper-gold-uranium mine in South Australia. The agreement will see an immediate cash injection of A$10 million into Perth-based Tasman for its highly prospective Vulcan iron-oxide copper gold uranium (IOCGU) prospect. Tasman will undertake a A$5 million exploration program across the project over the first 12 months, with the objective of further proving up the potential of the Vulcan prospect, first identified by Tasman in 2009.RTX has been granted the right (but not the obligation) by Tasman to earn up to an 80% interest in the project through a two stage farm-in arrangement. Should RTX elect to undertake both stages of the farm-in (subject to Tasman’s right to elect to contribute at the end of each stage) and should both stages of the farm-in reach completion, RTX may, subject to the terms, expend up to A$75.0 million in exploration costs and in addition pay Tasman up to A$17.0 million (including the initial $10 million payment).
The agreement, which is conditional on a number of conditions that Tasman hopes are able to be satisfied over the next six to eight weeks, comes just four weeks after Tasman entered into a Native Title Mining Agreement for Exploration, with native title claimants, for the area which covers most of EL4322 and on which the Vulcan project is located.
“Since first identifying the Vulcan prospect, we have maintained an unshakeable belief about the similarity of this prospect’s mineral styles relative to Olympic Dam and the potential for it to host a deposit of significant value,” Tasman’s Executive Chairman, Greg Solomon, said today. “Tasman, not surprisingly, received overtures about possible joint ventures or sale options over this project,” Solomon said. “We have resisted these until we could secure an agreement which brings to the table a company with the technological expertise and financial capability to inject sufficiently rapid, high level momentum designed to identify Vulcan’s potential in a manner rewarding to our shareholders,” Solomon said. “Rio Tinto delivers that partnership certainty.”
BHP Billiton has received environmental approval to quadruple copper output at its Olympic Dam mine over the next three decades. BHP plans to build a new open-pit mine to operate simultaneously with the existing underground mine, and will invest in new and expanded infrastructure, such as a waste rock storage facility and tailings storage facility.
The agreement Tasman/Rio covers Exploration Licence EL 4322 which hosts a number of IOCGU prospects including the Vulcan prospect. Tasman discovered the Vulcan prospect as a prime IOCGU target in 2009 after identifying its very large gravity anomaly and supporting magnetic and seismic anomalies, and recognising that its location placed it close to one of the key tectonic (structural) lineaments which had previously been used in the original targeting of Olympic Dam by WMC in the mid-1970s.
Tasman recently secured a Native Title Mining Agreement with the Kokatha Uwankara Native Title Claimants for exploration of almost the entire Lake Torrens project. Most of the eight holes drilled by Tasman to date are confined to a section in Vulcan’s north or east, intersecting iron-oxide copper gold uranium mineralisation and/or alteration in all holes. Tasman already has identified further priority drilling targets including in the southern portion of the prospect area. The company has set a tentative date for late October 2011 for a heritage clearance survey to be conducted in a number of areas, including the southern portion of the Vulcan prospect.
