Element 25 Ltd (ASX:E25) has agreed on terms with Scorpion Minerals Ltd (ASX:SCN) for an option to sell two exploration tenements adjacent to that company's Mt Mulcahy project.
Applications E20/953 and E20/948 cover 384 square kilometres, are contiguous with granted Scorpion tenure at Mt Mulcahy and are considered highly prospective for gold mineralisation.
Scorpion's new combined total project area will be 490 square kilometres.
The Mt Mulcahy copper-zinc volcanic-hosted massive sulphide (VMS) deposit has a JORC 2012 measured, indicated and inferred resource of 647,000 tonnes at 2.4% copper, 1.8% zinc, 0.1% cobalt and 20 g/t silver.
Pharos project
The two new tenements are known collectively as the Pharos project and Scorpion intends to conduct systematic exploration focusing on interpreted structural controls for primarily gold mineralisation associated with NNW trending splay structures.
The company believes there is ‘significant’ potential for new gold and base metal deposits within the expanded project area.
A number of companies have held tenure in the area, however, no systematic exploration was completed over the larger project area due to fractured ownership, and changing commodities focus over time from gold to base metals and then to iron ore.
Option terms
Terms for the option to purchase are:
- E25 to grant SCN a transferable, exclusive right to enter into an option to purchase a 100% interest in each tenement for a non-refundable payment of $10,000 per tenement ($20,000 total) on signing, which is binding on E25;
- SCN to complete due diligence prior to grant of tenement;
- Upon grant of each tenement, E25 to grant SCN a 9-month transferable, exclusive right to enter into an option to purchase a 100% interest in the project for a payment of $15,000 per tenement, which is binding on E25;
- SCN to have the right to exercise the option to purchase 100% interest in the project at any time within the 9-month period after grant for a consideration of $75,000 per tenement (excluding the option fee), payable within 7 days of signing formal binding legal agreements to transfer title. The option to purchase the first tenement will signal the binding intention to exercise the second tenement.
- SCN to have the right to extend the exclusive option for one period of 6 months by payment of $50,000;
- SCN to meet tenement expenditures during first year of grant, and pro-rata expenditure commitment for the extension period, should it be required; and
- E25 to retain a 1% NSR royalty on production from either tenement.
Future exploration
Scorpion's planned future exploration will include:
- Reprocessing of existing air magnetics and completion of a regional geologic interpretation;
- Detailed geological mapping of selected target areas;
- Systematic auger soils geochemical sampling of the project initially focusing on high priority targets; and
- Follow up RC drilling of historic drill intercepts at Candle, Lantern, Mustang Sally, Ulysses and Laterite Hill