Andromeda Metals Ltd (ASX:ADN) has executed a binding heads of agreement (HOA) with private entity Peninsula Exploration Pty Ltd to form the Eyre Kaolin Project Joint Venture (EKJV) comprising four tenements near the Great White Kaolin Project on the western Eyre Peninsula of South Australia.
Peninsulas owns the four exploration licence applications covering 2,799 square kilometres, which has halloysite-kaolin targets similar to those found at the Great White and Mount Hope Projects with recorded occurrences of kaolin clay.
Following the joint venture, the company will have the opportunity to earn up to 80% interest in the joint venture tenements through the sole funding expenditure of $2.75 million over six years.
Understanding of halloysite-kaolin geology
The tenements owned Peninsula have recorded occurrences of kaolin and existing data suggest that the tenement package has the potential to host halloysite with the physical properties sought by Andromeda.
Andromeda’s geology team has acquired a significant understanding of halloysite-kaolin geology over the last three years of intensive studies, which led to the identification of this ground and the new joint venture.
The company considers this ground to be very prospective for halloysite.
Key terms of the joint venture
The key terms of the farm-in and joint venture heads of the agreement include:
➢The company will make an initial payment to Peninsula of $20,000 upon execution of the HOA;
➢A minimum expenditure requirement of $140,000 to be spent by Andromeda on the project tenements within 12 months of commencement of the joint venture;
➢Stage 1 expenditure obligation by Andromeda of $750,000 within three years of starting to earn a 51% interest in the EKJV;
➢Andromeda can elect to sole fund an additional $2 million over a further three years on meeting Stage 1 to earn an additional 29% interest, taking its overall interest in the EKJV to 80%;
➢If a JORC 2012 compliant measured and indicated resource of at least 50 million tonnes calculated over the EKJV tenements, the company will issue $500,000 worth of its shares to Peninsula; and
➢Peninsula has the option to convert its remaining 20% interest into a 1.5% net profit royalty following a decision to mine.
Notification of proposed exploration licence terms
The South Australian Department for Energy and Mining has given notification of proposed exploration licence terms and conditions for all four exploration licence applications and these will be granted for an initial period of six years on acceptance of conditions and payment of licence fees.