TechGen Metals enters farm-in term sheet with Rio Tinto

TechGen Metals (ASX: TG1) is expected open higher this morning after announcing a binding farm-in-term sheet with Rio Tinto (ASX: RIO) for its Harbutt Range project in the south Paterson Province of WA, 1,200 km northeast of Perth.

The Paterson Orogen is host to numerous world class operating mines, Nifty Copper Mine & Telfer Gold-Copper Mine, and more recent significant new discoveries including the Winu Copper-Gold Deposit (Rio Tinto) and Havieron Gold-Copper Deposit, Greatland / Newcrest (ASX:NCM).

It’s understood Rio Tinto Exploration, a subsidiary of Rio Tinto, may earn an 80% joint venture interest in the project by sole funding $3m of exploration within five years, including a minimum of 3000 metres of drilling.

Commenting on today’s announcement, TechGen managing director, Ashley Hood, said:

“We are delighted to have such a quality exploration partner at the Company’s Harbutt Range Project and this Farm-In and Joint Venture with Rio Tinto Exploration enables the Company to additionally focus and spend our exploration funds on our other up-and-coming gold and copper drilling campaigns.

The Harbutt Range Project

The Harbutt Range Project, which comprises Exploration Licences E45/5294 and E45/5439 covering a combined area of 376 skm, lies within the Rudall Complex of the Proterozoic-aged Paterson Orogen.

The project is said to contain several geophysical and geochemical anomalies that represent potential target areas for further exploration, including drilling.

Management considers the Harbutt Range Project prospective for several mineralisation styles including intrusive related copper-gold and sediment hosted base metal (copper-lead–zinc–silver) mineralisation.

Identified prospects at the Harbutt Range Project include the Electromagnetic related Kaos, Control, Maxwell, El Gringo, Roulette & San Pedro Prospects and Induced Polarisation chargeability related Ninety-Nine & Anomaly A – E Prospects.

Prospect areas at the Harbutt Range Project. Airborne EM (colour) on airborne magnetics (grey).

Terms of the farm-in JV agreement

The Company has entered a binding term sheet with Rio Tinto Exploration Pty Limited pursuant to which:

• Rio Tinto Exploration has a sole and exclusive right to earn an 80% joint venture interest in the project by sole funding exploration expenditure of $3,000,000 over a 5-year period.

• Exploration by RTX to earn the 80% interest must include completion of a minimum of three thousand (3,000) metres of reverse circulation (RC) and/or diamond drilling at the project.

• Rio Tinto Exploration commits to incurring and sole funding a minimum exploration expenditure of $250,000 before 31 December 2023 (Minimum Expenditure), subject to extension in the event of certain delays to obtaining land access for exploration.

• Rio Tinto Exploration can withdraw from the Farm-In and Joint Venture Agreement at any stage after achieving Minimum Expenditure and in which case will retain no interest in the project.

• If Rio Tinto Exploration has earnt an 80% interest in the project and TechGen elects not to contribute to joint venture exploration expenditure, then TechGen’s interest will dilute by standard industry formula.

• If TechGen‘s interest falls below 10% then Rio Tinto Exploration will have a buyout right or the interest will convert to a 0.5% NSR Royalty on the first 8 years of commercial production.

Drilling a Station Creek

Today’s announced farm-in term sheet with Rio follows TechGen’s commencement of reverse circulation (RC) drilling at its Station Creek copper project in the Ashburton Basin of WA last Friday.

Station Creek considered prospective for shear-zone-hosted base metal and gold deposits.

This drilling program has been designed to test the TA1 and TA2 prospects, with 12 drill holes planned for around 2000 metres.

TechGen Metals share price.