Fidelity Minerals Corp. (TSX-V:FMN) said it has agreed to buy 50% of Greensands Australia Pty Ltd (GAL), which has applied for an exploration licence covering the Florina Greensand Project in the Northern Territory, Australia.
Fidelity said the other 50% is being acquired by Lions Bay Capital, the largest shareholder in Fidelity. The Florina Greensand Project comprises a large, surficial deposit of the mineral glauconite, located 70 kilometres (km) west of the regional town of Katherine, a regional centre 260 km south of southeast of the port city of Darwin that services well-developed horticulture, agriculture and cattle ranching. Katherine is serviced by major highway and railway infrastructure connecting the state capitals of Darwin and Adelaide.
“The company is pleased to acquire the Florina Greensands project and will endeavour to accelerate Fidelity’s entry into the rapidly growing organic, low chloride regional and global fertilizer market in collaboration with Lions Bay,” Fidelity said in a statement.
WATCH: Fidelity Minerals announces exploration program while acquiring a bigger stake in Las Huaquillas
“Recent political and social unrest in Peru has prompted the board to look to diversify Fidelity`s asset base,” Fidelity CEO Dean Pekeski said. “Given the commercial and market success of Verde Agritech in Brazil and the growing awareness of natural greensand fertilizers, the Florina Project offers an exciting exploration and agri-tech opportunity.”
Fidelity noted that previous test work has shown the Florina Greensand Project to contain significant concentrations of potassium and phosphorous, the major chemical elementals for the production of potash and phosphate fertilizers.
The company said Greensands Australia has also filed patent applications covering a process to “activate” glauconite, which has the effect of greatly increasing glauconite solubility. It said it believes this process has high strategic potential to render glauconite as feedstock for the production of organic potassium and phosphate fertilizers.
Under the terms of the agreement dated February 9, 2023, with GAL and the vendors, John Canario and Tracker Geoservices, Fidelity said it will:
- Issue 2 million ordinary common shares at $0.06 per share, which will be restricted from trading for one year, upon GAL receiving the exploration license;
- Agree to fund its 50% share of Stage 1 costs estimated to be A$250,000, with its share amounting to A$125,000;
- Agree to fund its share of Stage 2 costs estimated to be A$1 million including a scoping study, with its share estimated to be A$500,000);
- Upon completion of the scoping study, issue an additional two million ordinary common Fidelity shares; and
- Should the scoping study show a pre-tax internal rate of return of over 19% then the vendors will be entitled to a bonus payment of A$1 million to be satisfied by cash and shares, with a minimum 50% cash.
Fidelity said the Florina Greensand Project tenement application is expected to be granted in the current quarter, and this granting will trigger the completion of the agreement. On completion, it said Canaris will be invited to join the board of Fidelity and remain general manager of Greensands Australia.
It noted that its management team has over 50 years of combined fertilizer project development experience and is excited to have negotiated the acquisition of this new high-value fertilizer opportunity.
“The recent adoption rate of greensand fertilizers by the agriculture sector suggests that greensand fertilizer uptake is poised for major growth and that Fidelity will be rapidly positioned to participate in this environmentally responsible growth,” Pekeski added.
Fidelity said it remains committed to advancing its exploration efforts at the Las Huaquillas Project in Peru by completing drill permitting, environmental studies, and negotiating access to underground workings against the current political and social backdrop in Peru. It said it hopes to progress these items during the first half of 2023.
Contact the author at stephen.gunnion@proactiveinvestors.com