The companies entered an agreement in 2016 where Australian Mines’ wholly-owned subsidiary Flemington Mining Operations agreed to purchase the project for $6 million cash.
Australian Mines has already payed $2 million in rolling option payments and will now shell out an immediate $600,000 final option exercise fee.
The remaining $3.4 million is expected to be paid in mid-October when Australian Mines completes the purchase.
Under the agreement, Jervois was to retain a 1.5% gross royalty. However, Jervois agreed to sell the royalty to Cobalt 27 Capital Corp (TSXV: KBLT) earlier this year.
The Flemington royalty was sold as part of a package that also comprised the Nyngan royalty, with the sale for both totalling US$4.5 million. Of that, US$1.5 million was to be paid in cash with the remaining US$3 million issued in Cobalt 27 shares.
As a result of Australian Mines confirming it will proceed with the Flemington acquisition, Cobalt 27’s purchase of the royalty will also advance, with the sale due to be completed before the end of the December quarter.
Nico Young nickel-cobalt strategy
Jervois’ strategy behind to royalty and Flemington disposal was to focus on advancing its flagship Nico Young cobalt-nickel project, which has an inferred resource of 167.8 million tonnes grading 0.59% nickel and 0.06% cobalt and is close to requisite infrastructure.
Nico Young hosts two district mineralised bodies on the adjacent Ardnaree and Thuddungra exploration licences.
Although a laterite deposit, Jervois is evaluating economically unlocking the mineralisation via a heap leach processing operation and has already secured equipment in anticipation.
According to Jervois, heap leach processing has a lower capital cost and is less energy intensive than high pressure leaching.
A prefeasibility study is underway at the project as well as detailed metallurgy and pit optimisation studies.