Codrus Minerals signs deal to earn 90% equity in Karloning rare earth elements project

Codrus Minerals (ASX: CDR) has signed a farm-in and joint venture agreement with private vendor Talgomine Minerals to earn up to 90% interest in the Karloning rare earth element (REE) project in Western Australia’s Wheatbelt region.

The deal provides Codrus with a low-cost, simple and staged approach to joint venture equity and will be conducted for a cash consideration of $30,000 plus the issue of $30,000 in Codrus shares at a 10-day volume weighted average price (equating to approximately 430,000 shares at $0.07 each).

Total equity will be earned in stages, commencing with a minimum exploration expenditure requirement of $100,000. Once Codrus has achieved this, it will grant Talgomine 1 million options with an exercise price of $0.20 and a two-year expiry from the date of issue.

Spending an additional $300,000 on exploration will earn Codrus a 70% equity, after which it will grant Talgomine a further 2.5 million options with an exercise price of $0.50 and a similar expiry date.

At this point, Talgomine may contribute to the joint venture or be free-carried through to definitive feasibility study stage. If it chooses the latter option, Codrus’ equity will increase to 85%.

On completion of a definitive feasibility study, Talgomine can choose to contribute to the joint venture or be free-carried to the start of mining operations, at which point Codrus will assume the maximum 90% equity.

Spin-off company

Codrus is a spin-off vehicle created last year to house Blackstone Minerals’ (ASX: BSX) Australian and US gold projects while it focuses on the Ta Khao nickel-copper development in Vietnam.

Codrus has referred to the Karloning deal as an “exciting growth and diversification opportunity” to explore for high-value REEs such as praseodymium, neodymium, terbium and dysprosium which are critical materials used in the manufacture of high-strength permanent magnets.

Grab samples from Karloning have shown the presence of all elements, as well as significant grades of tantalum and niobium.

High-grade assays include more than 5,740 parts per million dysprosium oxide, 2,658ppm neodymium oxide, 3,516ppm terbium oxide and 235ppm praseodymium oxide.

Adding depth

Codrus managing director Shannan Bamforth said the deal adds depth to the young company’s gold portfolio.

“We have managed to secure a majority interest in a highly prospective project within a Tier 1 location not far from Perth… we are attracted to the REE sector because of its strong fundamentals and the relative scarcity of quality exploration opportunities,” he said.

“The Karloning pegmatite is located in an existing quarry, providing us with a unique opportunity to observe the geology and make a rapid assessment of the exploration potential.”

He said an unprecedented growth in industries which rely on permanent rare earth magnets (such as electric vehicles, wind turbines and other renewable energy applications) had created a high demand for Karloning elements.

Walk-up opportunity

Karloning has been referred to as a “walk-up exploration opportunity” and will be the subject of initial exploration activities including drone or ground magnetics, ground radiometric surveys and soil sampling.

The results will underpin a maiden drilling program in the new year which will focus on defining the extents of the pegmatite and primary controls on the distribution as well as the continuity of REE mineralisation.

Mr Bamforth said work will commence on the project’s joint venture ground as soon as practicable and on Codrus’ wholly-owned tenement as soon as it is granted.