Diatreme Resources (ASX:DRX) has executed a conditional purchase agreement to acquire the Eucla Basin Tenement in Western Australia from Image Resources (ASX:IMA) for $435,000.
The acquisition of the tenement, which includes the Cyclone Extended Heavy Mineral Resource, increases the resource at its flagship Cyclone Zircon Project by 53% to 223 million tonnes at 2.1% heavy minerals, or 4.6Mt of heavy minerals.
In September, project partner Perpetual Mining Holding Limited completed its initial farm-in commitment at Cyclone by investing $2 million to earn a 6% stake in the project.
Diatreme has paid a non-refundable deposit of $20,000 and will pay the remaining $415,000 within 120 days.
The company will carry out a capital raising during this period.
Image will retain a 1% production royalty on all heavy mineral production within the area of the transferred tenement.
Diatreme will have the option to acquire the royalty at an agreed value of $435,000 exercisable by the 1 January 2017.
This acquisition has the potential to extend mine life by five years or more, based on Diatreme’s existing mine design plans, and is a significant increase to the project’s known HM resource.
It also allows for a wider range of options in mine planning and design, which could include ramping up production levels or targeting higher grade ore on the commencement of mining.
Diatreme is also continuing work under its partnership with Hong Kong-based PMHL to increase investment confidence in the project, including water testing, environmental studies and regulatory approvals.
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