Brisbane-based junior Superior Resources (ASX:SPQ) has signed an earn-in and joint venture agreement with global miner South32 (ASX: S32) to advance the exploration of its wholly-owned Nicholson lead-zinc project in northwest Queensland.
Under the terms of the newly-formed Hedleys Joint Venture, South32 will fully-fund an initial $2 million or 4000 metres of drilling during the first 12 months of activity, with funding to commence immediately.
Drilling will focus on three Tier 1-equivalent, Mount Isa-style, lead-zinc-silver targets which Superior believes could be similar in size to the nearby McArthur River and Century deposits.
At the completion of Stage 1, South32 may proceed to Stage 2 by sole-funding a further $4 million of exploration during the following four years, to earn a 70% interest in Nicholson.
After that, the miner could earn an additional 10% interest by electing to commence and sole-fund a pre-feasibility study for the project.
Superior has been appointed operator of the joint venture until completion of Stage 2, at which point South32 will take over.
Superior managing director Peter Hwang said he was looking forward to advancing the Nicholson project which sits within the globally-attractive Carpentaria zinc province and believed to contain around 20% of the world’s zinc inventory.
“[This] is a significant milestone for our lead-zinc strategy and validates the potential of [Nicholson] to host a world-class base metals deposit,” he said.
“The [agreement] ensures we will be fully-funded to complete a substantial drilling program within the first year… we believe there are few peer stocks on the ASX with such an exposure to entry-level, Tier 1 lead-zinc-silver projects.”
The Nicholson project is located 250 kilometres southeast of Glencore’s established McArthur River mine, one of the world’s largest lead-zinc-silver operations.
It is also 110km north-northwest of the large Century lead-zinc-silver mine owned by New Century Resources (ASX: NCZ).
Nicholson is located within a sequence of prospective Proterozoic sediments within the east-north-east trending Hedleys Graben, and is considered to have the potential to contain sediment-hosted, lead-zinc-silver, massive sulphide deposits similar to McArthur River.
At least five large geophysical targets have been identified as high-priority to date, with only one of them subject to previous exploration drilling.
Mr Hwang said drilling is expected to commence shortly after the completion of an aboriginal cultural heritage survey, scheduled for June.
At mid-afternoon, shares in Superior Resources were trading 16.67% higher at $0.007, while shares in South32 were down 1.89% to $3.375.