Perpetual Resources Ltd (ASX:PEC) has inked a landmark binding lease option agreement with the Yamatji Southern Regional Corporation (YSRC), providing access to the water requirements of its flagship Beharra Project.
This move, described as a “groundbreaking” agreement, represents the first water lease signed from the Strategic Aboriginal Water Reserve and will help provide water to the high-grade silica sand project over an initial 10-year term.
The YSRC will provide 560,000 kilolitres of water every year to PEC — enough to operate at Beharra’s base case production scenario of 1.5 million tonnes of silica sand per annum.
In exchange, Perpetual has transferred $10,000 to secure the initial option, while it will pay $70,000 (plus GST) in annual groundwater allocation rent.
As it ramps up development activities at the pioneer Beharra project, Perpetual is targeting the high growth Asia Pacific silica sand markets.
Independent market assessments have calculated a 40 million tonne per annum incremental market growth opportunity through to 2026.
“Strong working relationship”
Commenting on the agreement, Perpetual managing director Robert Benussi said the company was proud of its solid and strengthening relationship with the YSRC.
“We sincerely thank the YSRC for the collaborative way they have worked with us on developing this innovative water licence agreement over the past few months.
“We have a deep and strong respect for the YSRC, which we recognise as the custodians of the land on which the Beharra project is situated.
“Our mutual respect has enabled us to develop a strong working relationship, which we hope will see Perpetual and the YSRC continue to work closely for the benefit of both parties.
“Securing this important water allocation for the Beharra Project is a significant de-risking milestone for our company and we look forward to a number of exciting project-related updates in the coming months.”
Agreement details
Perpetual’s agreement with the YSRC covers a 10-year allocation that’s split into two five-year terms.
To secure the 18-month option for the initial term, PEC has transferred $10,000 to the corporation. It can receive a 12-month option for the further five-year term down the track for a further $20,000 payment.
YSRC and Perpetual have also agreed to negotiate in good faith to enter into a renewed lease agreement at the end of the further term, which potentially provides Perpetual with access to water for the Beharra project well beyond the initial 10-year period.
YSRC CEO Jamie Strickland commented: “This agreement is the first of its kind, demonstrating how our Strategic Aboriginal Water Reserve can generate economic benefits for Yamatji Nation.
“We look forward to working with Perpetual in coming years to develop other economic improvement initiatives.
“We are excited to work with Perpetual and thank them for their commitment in recognising our role as a catalyst for a strong and sustainable future for our members, and by unlocking opportunity with our assets."
Aboriginal heritage agreement
In addition to the groundwater allocation agreement, Perpetual recently finalised its Aboriginal heritage agreement, which applies to the Beharra tenure and its recently acquired Arrowsmith West tenure.
The AHE covers the tenure and all related activities, spanning exploration, development and production and was also completed between Perpetual and YSRC.