- Sultan Resources (SLZ) enters a binding option for a farm-in and joint venture agreement with Rio Tinto’s (RIO) subsidiary, Rio Tinto Exploration (RTX)
- RTX will hand over $25,000 to SLZ to conduct preliminary exploration, with the option to extend for another six months
- Once the initial drilling phase is complete, the 80/20 contributing joint venture will be formed
- RTX will be responsible for all rent and required expenditure on the site and has a the power to reuse the sale of the project
- Sultan Resources rose 2.27 per cent to 4.5 cents, while Rio Tinto slumped 0.6 per cent to $116.70 at 12:15 pm AEST.
The deal would allow Sultan to continue the exploration of Kulin Hill at its Lake Grace tenure in Western Australia.
The terms of the agreement will see RTX pay $25,000 to Sultan, and will hold the right to exclusively conduct preliminary exploration for six months, with the option to extend.
RTX will hold an 80 per cent joint venture interest in the tenement while funding $2 million of exploration activity, including a minimum of 1000 metres of reverse diamond drilling.
The company will have five years to meet the minimum farm-in expenditure, however if the company does not meet the requirements or choses to cease the partnership, RTX will be liable to pay Sultan $50,000.
Once the initial drilling phase is complete the 80/20 contributing joint venture will be formed, with Sultan still holding 100 per cent ownership of the project.
If either party’s interest in the joint venture falls below 10 per cent, the other company can buyout the interest at a fair-market value or the interest will be converted to a one per cent net smelter royalty payable for the first five years of commercial production.
During the agreement RTX will be responsible for all rent and required expenditure on the site and has a the power to reuse the sale of the project.
Sultan chairman Jeremy King said the agreement will hopefully lead to a “mutually rewarding partnership.”