IRIS Metals Ltd (ASX:IR1) has entered into a binding heads of agreement (HOA) securing an exclusive right to farm in to the Finley Basin Tungsten Project in Granite County, Montana, marking the company’s first move into tungsten and expanding its United States critical minerals footprint.
The agreement with Finley Mining Inc. and its shareholders provides IRIS with a 40-business-day exclusivity and due diligence period, during which the parties will work towards executing full-form farm-in documentation. The exclusivity period may be extended by a further 40 business days upon payment of an additional fee.
The transaction gives IRIS exposure to a high-grade tungsten project with historical exploration and a non-JORC-compliant historical mineral reserve, positioning the company within a commodity considered strategically important for defence, energy and industrial applications.
"This binding agreement marks an exciting step for IRIS as we grow and diversify our critical minerals portfolio into tungsten, a vital component for the defence and technology industries. The Finley Basin Project offers significant upside with its prospective geology and location in a mining-friendly jurisdiction. Combined with our existing South Dakota portfolio, this positions IRIS to capitalise on significantly growing demand for US-sourced critical minerals," IRIS Metals executive chairman Peter Marks said.
Historical drilling highlights high-grade tungsten potential
The Finley Basin Project was subject to limited exploration by Union Carbide Corporation during the late 1970s and early 1980s, including a 10-hole drill program that defined a historical tungsten reserve of 850,000 tonnes at an average grade of 0.68% WO₃.
This historical estimate comprises 350,000 tonnes classified as indicated and 500,000 tonnes classified as inferred. While the estimate is not reported in accordance with the JORC Code and is not considered a current mineral resource or ore reserve, IRIS views it as indicative of high-grade mineralisation relative to many global tungsten deposits.
Historical Mineral Reserve, Union Carbide Corporation, Finley Basin Project, Montana USA.
Tungsten mineralisation at Finley Basin is predominantly hosted as scheelite within a tactite skarn formed at the contact between a granitoid intrusion and Mississippian-age limestone. Historical work indicates mineralisation from surface to depths of around 300 metres, with the system remaining open both laterally and at depth.
Geological setting and regional advantages
The project covers approximately 378 hectares of unpatented mining claims within the Flint Creek Mountain Range, an area with a long history of tungsten production dating back to the early 1900s.
Geologically, the project is interpreted as a tungsten-rich skarn overprinting a regional copper-zinc-molybdenum hydrothermal breccia system. IRIS believes this setting offers potential not only to confirm known mineralisation but also to expand the mineralised footprint through further drilling and regional exploration.
A key advantage is the presence of a fully permitted and operational contract mill located in Phillipsburg, Montana, approximately 30 kilometres by road from the project. The mill has a capacity of 1,000 tonnes per day and includes gravity and flotation circuits suitable for tungsten concentrate production, potentially reducing future development timelines if a resource is confirmed.
Staged earn-in structure and deferred consideration
Under the proposed farm-in structure, IRIS can earn up to a 100% interest in the Finley Basin Project through staged exploration expenditure totalling up to US$2 million over four years.
An initial 70% interest can be earned by spending US$1 million on exploration and delivering a JORC-compliant inferred resource within two years of executing the formal agreements. IRIS can then increase its interest to 90% by spending a further US$1 million within four years.
Upon earning a 90% interest, the vendors’ remaining 10% interest converts to a 2% net smelter return royalty, with IRIS retaining a right of first refusal over any royalty sale. IRIS may also elect to withdraw after spending a minimum of US$250,000, with no further obligations.
In addition, deferred consideration of up to A$1 million in IRIS shares may be issued if specified JORC-compliant inferred resource thresholds are achieved within five years, with payments linked to defined tonnage and grade milestones.
Planned exploration and development timeline
IRIS has already started exploration permitting activities and is targeting the start of drilling in the third quarter of 2026. The initial work program is designed to recreate and expand upon the historical Union Carbide drilling and to generate the data required for a maiden JORC-compliant mineral resource estimate.
Planned activities include acquisition and consolidation of historical data, development of an initial 3D geological model, and execution of a planned 4,500-metre Phase I drill program. Metallurgical testing is also planned to assess processing options and compatibility with the nearby contract mill.
Assuming successful outcomes, IRIS is targeting completion of an initial mineral resource estimate in early 2027, alongside reconnaissance exploration to generate additional targets for follow-up drilling.
IRIS’ near-term exploration work program at Finley Basin will include:
- Data Acquisition — Acquire additional historical project data, and aggregate dataset for generation of initial 3D geologic model of the project
- Phase I Drill Program — Finalise permitting and execute a planned 4.500m drill program at the Finley Basin Project to recreate, confirm, and expand on the historical work of Union Carbide
- Metallurgical Testing — Complete initial metallurgical testing to confirm process flowsheet and viability of utilising the local contract mill for processing
- Mineral Resource Estimate — Contract of geological consultants to develop more refined geologic models and construct a mineral resource estimate based on the results of IRIS’ Phase I drill program at Finley Basin
- Target Generation — Complete reconnaissance sampling and mapping over additional tungsten skarn targets in the immediate vicinity of the known mineralization within Finley Basin, and initiate permitting for a Phase II drill program.
Strategic fit with US critical minerals strategy
The move into tungsten complements IRIS’ existing lithium and rubidium assets in South Dakota, where the company is pursuing a hub-and-spoke development strategy focused on centralised processing and multi-mine production.
The Finley Basin acquisition aligns with broader US incentives for domestically sourced critical minerals, supporting supply chain resilience amid growing demand for strategic metals.
IRIS has also indicated it continues to prioritise advancement of its South Dakota portfolio, with the Montana tungsten project viewed as a strategic diversification rather than a shift in near-term focus.
Capital raising deferred following transaction
In conjunction with announcing the farm-in agreement, IRIS confirmed it will not proceed with a previously proposed capital raising that had been referenced during a recent trading halt.
The board said the decision reflected the timing of the tungsten transaction and the desire to ensure the market was fully informed of the strategic merits of the acquisition before progressing any fundraising activities.
IRIS noted that limited expenditure is required to advance the Finley Basin Project through the first half of 2026, with additional funding to be considered as the project moves toward drilling and resource definition.