Aeon Metals (ASX: AQR) formerly Aussie Q Resources and a subsidiary of mining giant Rio Tinto (ASX: RIO) have signed a Letter of Intent over Aeon's tenement known as EPM 17060 in Western Australia.
The tenement is outside of Aeon's main Greater Whitewash, John Hill and Kiwi Carpet Projects, which are prospective for molybdenum and copper - with the agreement allowing the company to focus on exploration and development of these projects.
Importantly for the agreement - it may lead to a joint venture - with Rio Tinto Exploration Pty setting out indicative terms in regard to a proposed earn-in and joint venture, including all data, reports and any other assets held by Aeon relating to the tenement.
Rio Tinto Exploration now has a 60 business day exclusivity period during which the parties intend to negotiate and execute an Exploration and Earn-In Joint Venture Agreement (EEJVA) for the exploration and evaluation of the project.
Phase 1 Period - Exploration:
Rio Tinto Exploration to sole fund an exploration program and any associated expenditure to a minimum of AU$200,000 within 12 months prior to any withdrawal.
Phase 2 Period – Earn-In:
When Phase 1 satisfied, Rio Tinto Exploration shall, within 20 business days, make a decision to conduct further exploration on the Tenement or terminate the EEJVA.
If Rio Tinto Exploration elects to conduct further exploration then Aeon will extend Rio Tinto Exploration’s exclusive exploration rights to the project for a further period of thirty six months from the date of such election.
Rio Tinto Exploration will then commit to a total expenditure of A$2,500,000 over this phase to earn its initial interest.
When satisfied, Rio Tinto Exploration and Aeon will form an unincorporated joint venture to continue the project with Rio Tinto Exploration holding 70% and Aeon 30%.
Phase 3 Period – Pre-Feasibility:
Within thirty days of formation of the joint venture, Aeon must notify Rio Tinto Exploration whether or not it will contribute its share of future funding of the project on a pro-rata basis, as per the parties’ participating interests in the joint venture.
If Aeon elects not to contribute its share of future funding, Rio Tinto Exploration will have no further obligation to fund the project but may elect, in its sole discretion, to continue to sole fund the Project, in which case it will commit to: expenditure of A$15,000,000; or completion of a Pre-Feasibility Study, whichever occurs first, within five years from satisfying Phase to - to earn an additional 20%.
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