Essex Minerals Inc. (TSX-V:ESX) said it has entered into binding terms with First Au Limited (FAU) for an arm's length option, earn-in, and acquisition of the Mt Turner project in north Queensland, Australia.
Essex noted that its preliminary exploration activities have outlined a very large copper-molybdenum (with gold and silver) porphyry target at the project.
The Vancouver-based junior added that FAU considers Mt Turner a strategic acquisition that complements the Australian explorer's existing copper prospects of Dogwood in Victoria and Mabel Creek in South Australia.
READ: Essex Minerals reveals new, large copper-molybdenum target at its Mt Turner project in Queensland
"Copper is expected to play a critical role in the electrification of the global economy and the transition to green energy. An independent report by Goldman Sachs last year indicated the worldwide demand for copper for transitioning to green energy alone will increase from under 1Mt in 2020 to approximately 5.4Mt by 2030 (16% of total global copper demand),” said Essex CEO Paul Loudon in a statement.
"Having incubated the project with initial exploration expenditure, Essex is now leveraging its position in the project by joint venturing the next round of exploration expenditure then monetizing the project with a spin out or sale.”
Loudon added: “This project incubation then spinout, particularly where we can retain a royalty and a right to provide stream or project finance, is fundamental to the company's business growth model."
Financial terms
Essex said upon execution of a formal agreement once certain conditions are met, FAU will pay it an Option Fee comprising 5 million fully paid ordinary FAU shares and 5 million two-year share purchase options exercisable at AU$0.03 per option and within 220 days fund a minimum AU$500,000 on exploration of the Mt Turner project, including a detailed induced polarization program over the main Mt Turner mineralized anomaly.
Payment of the Option Fee is conditional on 60 days due diligence by FAU, completion by Essex of its share purchase of KNX Resources Limited, signing of a formal agreement, and TSX approval (if required).
Subject to completing the minimum expenditure during the Option period and its willingness to proceed, Essex said FAU will pay it a further 10 million fully paid ordinary FAU shares and then will have the right to earn a 51% interest in the Mt Turner project by spending a further AU$2 million on exploration over two-years from exercise date of the Option.
At the completion of the earn-in, FAU will then have the right to acquire the remaining 49% interest in Mt Turner by issuing to Essex either 49% of the equity in a special purpose vehicle formed to hold the Mt Turner project, or that number of shares in FAU equivalent to an independent valuation of the 49%.
Essex also will retain a 1.5% net smelter return royalty over the project, which FAU can acquire for the payment of AU$3 million cash.
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