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Montezuma Mining does deal with Magmatic Resources for Mt Venn

The company will receive cash and shares upfront plus potential milestone payments.
a deal being signed, two hands with pens signing a page
Cash from the disposal can be used on the company's high priority projects

Montezuma Mining Company Ltd (ASX:MZM) has entered a binding agreement with Magmatic Resources Ltd (ASX:MAG) to sell an exploration tenement at the Mt Venn intrusion, Western Australia.

The deal is structured for a win-win outcome between the two companies in that Magmatic gets a high priority project and Montezuma remains leveraged to its upside.

On acquisition, Montezuma will receive $250,000 cash and $425,000 worth of Magmatic shares.

Notably, Montezuma can receive further payments of up to 6.4 million if Magmatic reaches various milestones.

Magmatic must spend $500,000 within 18 months

Fortunately for Montezuma, it has a number of higher priority projects in its portfolio than Mt Venn.

However, Mt Venn is a project with growing potential, as seen by neighbouring explorer, Great Boulder Resources Ltd (ASX:GBR).

Great Boulder has intersected wide zones of primary copper-nickel-cobalt sulphide mineralisation which included intersections of 48 metres at 0.75% copper, 0.2% nickel and 0.07% cobalt.

READ: Great Boulder Resources confirms copper-nickel-cobalt discovery and will expedite development

The deal keeps Montezuma leveraged to the project’s success and it also states that Magmatic must spend $500,000 within 18 months.

This ensures exploration funding is utilised by Magmatic to explore the project’s potential.

Montezuma can receive up to $6.4 million in further payments

The Mt Venn project, or E38/2961 sale, is bound by the following terms:

• On acquisition Magmatic will pay Montezuma A$250,000 in cash and A$425,000 in MAG shares;
• Should Magmatic define a JORC resource of 20 million tonnes at 1% copper equivalent, Magmatic will pay Montezuma A$350,000 cash and A$350,000 in MAG shares;
• Should Magmatic make a decision to mine, it will pay to Montezuma A$350,000 cash and A$350,000 in MAG shares;
•  Montezuma will retain a 2.0% net smelter royalty (NSR) on production at E38/2961 but Magmatic can buyback the option for A$5 million cash; and
• Magmatic must expend a minimum of A$500,000 on exploration at E38/2961 within the first 18 months following acquisition and must pay Montezuma the difference if it spends less.

READ: Montezuma Mining Company expedites manganese project with mining lease application

Montezuma Mining recently initiated a scoping study to review the potential for the Butcherbird Manganese Project located in Western Australia.

The company aims to produce a range of high-value manganese products on a commercial scale.

The study will assess the options for project development and provide an assessment of the potential capital and operating cost requirements for project development.

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