Andromeda Metals has signed an agreement with Peninsula Exploration to create the Eyre kaolin project joint venture (JV) in South Australia.
Peninsula is a privately listed company that will explore its four tenements with Andromeda.
The tenements are near Andromeda’s Great White kaolin project in the western Eyre Peninsula.
Andromeda can earn an 80 per cent interest in the joint venture by providing $2.75 million of funding over six years.
The company has more than doubled its kaolin tenements in the Eyre Peninsula region through the JV.
The four tenements cover 2799 square kilometres, with the Eyre Peninsula holding major halloysite-kaolin deposits.
Andromeda stated the tenements have similarities to its Great White and Mount Hope projects in South Australia and feature occurrences of kaolin clay.
The company stated three years of intensive studies on halloysite formations from its geology team led to the formation of the JV.
“Following a geological review of Australia and especially the Eyre Peninsula, the ground held by Peninsula was identified as containing halloysite kaolin targets similar to those found at numerous places across the Great White and Mount Hope project ground,” Andromeda stated.
“The Andromeda geology team has gained considerable understanding on the formation and occurrence of halloysite over the past three years of intensive studies, which led to the identification of this ground and the new joint venture.”
The terms of the JV include an initial payment of $20,000, and a minimum expenditure requirement of $140,000 from Andromeda within the first 12 months of the JV.
Andromeda has agreed to spend $750,000 as part of its stage one expenditure obligation within the first three years to earn a 51 per cent interest.
If a resource of at least 50 million tonnes is discovered, Peninsula will be awarded $500,000 worth of Andromeda shares.
If Andromeda spends $2.75 million to earn an 80 per cent interest, Peninsula also has the option to convert its remaining 20 per cent interest into a 1.5 per cent net profit royalty following a decision to mine.