Rio Tinto has executed two agreements with DiscovEx Resources that will give the company the option to acquire the iron ore rights of four tenements within the Sylvania project in Western Australia.
The Sylvania project is located approximately 15km south-west of Newman in the Pilbara and is proximate to BHP’s Newman iron ore operations.
Through subsidiary Rio Tinto Exploration (RTX), the major miner has committed to a potential consideration of up to $9.3 million as part of the Spearhole agreement and Sylvania agreement.
The Spearhole agreement is specific to Sylvania’s Spearhole detrital iron ore deposit and enables RTX to commit $67,500 for an initial two-year option period, $180,000 per year for an initial two-year extension to the option period, and $225,000 per year for a further two-year extension beyond that.
RTX can pay $7.2 million to exercise the Spearhole agreement at any time, which will see the company acquire 100 per cent of the iron ore rights to tenement E52/3780, within which the Spearhole deposit is located.
If the agreement is exercised, a 0.9 per cent free on board (FOB) royalty is to be paid for the first 20 years of production.
The Sylvania agreement is specific to tenements E52/3365, E52/3366 and E52/3980 within the broader Sylvania exploration area. All tenements are wholly owned by Lighthouse Resource Holdings (a subsidiary of DiscovEx); however, a royalty is held by Gateway Mining over tenements E52/3365 and E52/3366.
RTX can commit $50,000 for an initial two-year option period and $50,000 per year for a four-year extension to the option period. The explorer can pay $1.15 million to exercise the Sylvania agreement at any time.
If the agreement is exercised, a one per cent FOB royalty is to be paid for the first 12 years of production across the three tenements. RTX’s payments and royalties are to be split between DiscovEx and Gateway Mining under the existing royalty agreement.
“Attracting a Tier 1 global miner to explore the iron ore potential at Sylvania speaks volumes about the quality of the tenement package DiscovEx has been able to accumulate over the past two years,” DiscovEx managing director Toby Wellman said.
“Not only is this an opportunity for DiscovEx to monetise the iron ore assets held within the project, but we also see the advantages of data sharing with Rio to progress our main focus, that being the discovery of gold and base metals resources.”