West Wits Mining Ltd (ASX:WWI)’s wholly-owned subsidiary, Northern Reserves Pty Ltd, has entered a joint venture (JV) term sheet with Rio Tinto Exploration Pty Limited (RTX) – itself a subsidiary of Rio Tinto PLC (LSE:RIO) – to explore WWI’s Mt Cecelia tenement, with RTX potentially contributing more than $10 million to exploration efforts on-site.
The tenement is located on the border of the East Pilbara and Paterson Provinces of Western Australia and covers 225 square kilometres of highly prospective ground, strategically located adjacent to tenements held by Rio Tinto, Carawine Resources Ltd (ASX:CWX), and Rumble Resources Ltd (ASX:RTR).
West Wits performed a sky-borne transient electromagnetic (SkyTEM) heliborne electromagnetic (HEM) survey in September 2020.
The survey results identified eight target areas with four deemed high priority, later backed up with a moving loop transient electromagnetic (MLTEM) survey that confirmed all four priority targets were related to legitimate bedrock related conductors.
“A wealth of technical expertise”
West Wits managing director Jac van Heerden said: “The strength of the electromagnetic survey results for the Mt Cecelia Project has been highlighted by Rio Tinto, a global, tier-one mining company, committing significant expenditure to advance exploration and drilling in 2022.
“RTX brings a wealth of technical expertise, resources and regional knowledge which, combined with synergies from their exploration of Mt Cecelia’s neighbouring tenements (that are held 100% by RTX), will enable the Mt Cecelia targets to be rapidly and systematically tested.”
Eight SGC target zones (magenta) identified. Conductor axes marked by lines (bright red, yellow and blue) together with magnetic lineaments (brown) on SKYTEM CH15Z component image.
WWI has identified SGC_1 as the highest priority target defined by the SkyTEM surveying, given the clearly discrete nature of the anomalism and correlation with a zone of de-magnetisation in the local sequence.
The MLTEM survey also confirmed the presence of a strong, localised bedrock conductor. The conductor is situated either within a zone of local de-magnetisation or at the contact of a complex magnetic unit and represents an immediate drill target.
Key terms of the JV agreement
Stage one – RTX earns 51% interest:
- RTX must pay West Wits $150,000 up-front;
- RTX has a sole and exclusive right to earn an initial 51% joint venture interest in the tenement by sole funding exploration expenditure of A$4 million within four years after the agreement's execution date; and
- RTX commits undertaking to sole fund a minimum of 800 metres of diamond core and/or reverse circulation drilling on the tenement before December 31, 2022; subject to no events of force majeure, including land access delays where RTX has made demonstrable reasonable efforts to obtain land access in an expeditious manner.
Stage two – RTX earns an additional 29% interest (80% total RTX interest):
- Once RTX has earned a 51% interest in the tenement, a joint venture will be formed;
- After obtaining the initial 51% interest, RTX has the right to sole fund a further A$6 million of exploration expenditure within three years of the joint venture formation date to earn an additional 29% interest in the joint venture;
- If RTX makes the stage two sole fund election, RTX must pay West Wits a further $250,000;
- Once the joint venture is formed and, following either RTX earning an extra 29% interest through the achievement of the sole funding milestones or RTX not making the stage two sole fund election, either party may elect to contribute to joint venture expenditure proportionate to its interest or have its interest diluted; and
- If either party’s interest falls below 10% (being a diluting party), then the other party has a right to buy out the joint venture interest of the diluting party at fair market value (as agreed between parties or by independent valuers) or the diluting party is deemed to have converted its interest into a 1.0% net smelter royalty payable on the first eight years of commercial production.
About West Wits Mining
West Wits Mining is an exploration and development company targeting gold in two prolific regions, Witwatersrand in South Africa and the Pilbara in Australia.
The company aims to transition to a mid-tier gold producer from its flagship project in South Africa’s Central Rand Goldfield, the Witwatersrand Basin Project (WBP), which contains a JORC-compliant global mineral resource of 4.28 million ounces of gold at 4.58 g/t.
West Wits is also targeting gold, volcanogenic massive sulphides (VMS) and manganese at its Mt Cecelia tenement.