Investigator Resources (ASX: IVR) has agreed to farm-out its Fowler Domain nickel-copper tenements in South Australia to private company Osmond Resources under a $2.75 million exploration agreement signed today.
Under the terms of the deal, Osmond will fund a minimum $750,000 over a period of three years at the 1,900 square kilometre package to earn 51% interest in a joint venture arrangement with Investigator.
If the minimum expenditure is met, the companies will enter into a formal earn-in and joint venture and the interest will be transferred to Osmond.
Osmond may then elect to proceed to the next stage of the agreement, for a $2 million exploration expenditure over a further three years.
The commitment will give Osmond an additional 29% interest, boosting its total joint venture equity to 80% and free-carrying Investigator through to completion of a pre-feasibility study.
On delivery of the study, Investigator may elect to fund further exploration and development costs on a pro-rata basis or dilute its equity to 5%, converting it to a 1% net smelter return royalty.
Investigator’s Fowler Domain tenements were formally granted in June, with interest in the region increased by Western Areas’ (ASX: WSA) discovery of significant nickel-copper sulphide mineralisation in the adjacent tenements.
Osmond has executed a separate agreement with a third party to explore on other adjacent tenements, taking its interest in Fowler Domain to a total of approximately 3400sq km.
Investigator managing director Andrew McIlwain said the farm-out was a strategic move which would allow the company to focus on its existing assets.
“While we consider Fowler Domain to be highly prospective, the early exploration nature of the area would draw our attention away from opportunities we have at our existing Uno, Morgans and Harris Bluff tenements and the ongoing work on our Paris silver project,” he said.
“This agreement is consistent with our approach of assessing the exploration potential of a tenement package while minimising risk and costs, and maintaining discovery exposure through a residual interest and a shareholding in Osmond.”
Osmond Resources is an unlisted public company formed in 2021 for the purpose of seeking admission to the ASX.
Having raised adequate seed capital, the company has secured rights to additional tenements in the Fowler Domain and expects to hit the ASX boards later this year.
Within five days of today’s agreement, Osmond will be required to issue 200,000 shares to Investigator and issue a further 900,000 shares on listing, at a deemed initial public offering price of $0.20 each.
If Osmond fail to list by end March 2022, the deal will fall away and Osmond will have no further earn-in rights.