Bryah Resources (ASX: BYH) and OM Holdings (ASX: OMH), the duo exploring the manganese potential of land within Western Australia’s Bryah Basin, are set to make their joint venture official following the completion of a stage one exploration program.
The companies have been paired up since April, when manganese miner and processor OM agreed to spend $7.3 million on manganese exploration across Bryah’s 660sq km project to earn up to 70% of the manganese rights.
As per the terms of the farm-in and joint venture deal, OM paid a $250,000 signing fee plus funded $500,000 of project expenditure for an initial exploration program.
The program kicked off in May with drilling at the historic Horseshoe South manganese mine.
Drilling continued over June and July, with the duo intersecting significant manganese at the Brumby Creek, Devils Hill, Black Beauty and Black Hill prospects, as well as discovering the new Cheval prospect.
Bryah managing director Neil Marston told Small Caps the company has been “very excited” with the results of its stage one manganese exploration campaign.
“Bryah looks forward to OM Holdings formally committing to stage two later this month.”
“With OM Holdings by our side, Bryah’s manganese development strategy is significantly de-risked. OM Holdings are manganese specialists in mining, smelting and marketing. They have a ready manganese market for our manganese ore,” Mr Marston added.
OM is required to formally elect to proceed to stage two by 30 August by paying an election fee of $250,000. This will formalise the joint venture and OM will earn an initial 10% interest in the manganese mineral rights of the Bryah Basin project.
In this second stage, OM is required to fund a further $2 million of project expenditure by the end of June 2022 to earn an additional 41% stake, giving the company a total 51% interest in the joint venture.
Bryah will continue to be the project manager for stage two, with OM being granted the option to manage the project once it has earned its 51% share.
In an investor presentation also released this week, Bryah said its upcoming manganese activities included trial geophysical surveys and drilling to test new target areas at prospects including Cheval and Black Beauty.
Follow-up drilling of mineralised areas and metallurgical test work is also planned.
The duo’s aim is to work towards completing mineral resource estimates, evaluate mining options, then securing mining leases and approvals.
After stage two
Under the pair’s joint venture deal, OM may elect to be the project manager once it earns its 51% stake and Bryah may elect not to contribute to project expenditure.
OM will then be required to fund the next $1.8 million of project expenditure to earn a 60% interest, with Bryah’s stake diluting to 40%.
Under a fourth stage, OM can earn a further 10%, increasing its total joint venture equity to 70%, by funding an additional $2.5 million of project expenditure.
If a positive feasibility study is supported by a decision to mine then the pair may then elect to participate in a mining joint venture in proportion to their joint venture interests or convert to a royalty.
The joint venture only applies to manganese rights, with Bryah retaining full ownership of all other minerals at the project.