Sydney-based junior Red Metal (ASX: RDM) has struck a farm-in and an agreement with Cameco, one of the world's largest uranium miners.
The deal, with Cameco Australia, is over Red Metal's Lakes uranium project in the highly prospective Frome Sub-Basin of South Australia.
Cameco will gain an exclusive right over a six-year period to explore for uranium and earn a 51% interest in any or all of the four Red Metal Lakes Project tenements.
Cameco is required to sole fund AUD$4 million of expenditure and should it elect to earn a 51% interest in all four tenements, it would be required to contribute AUD$16 million.
The joint venture ensures a work program with a minimum total project annual commitment of $700,000 on exploration in the first year and $500,000 in subsequent years.
Once Cameco has earned 51%, Red Metal can elect to contribute to further exploration and development at a 49% interest or reduce to a 30% interest free-carried to a decision to mine.
Exploration on the Lakes project targets giant sandstone-hosted, roll-front type uranium plays hosted in the same Tertiary sedimentary sequences that host the nearby Beverley and Four Mile uranium deposits.
An extensive regional drill program completed last field season identified previously unrecognised thick, oxidised sand sequences in the prospective Eyre and Namba Formations at several locations as well as some anomalous uranium in reduced channel sands.
The anomalous uranium and oxidised sequences are considered significant as they indicate oxidising and potential uranium-bearing fluids may have passed through the rocks and deposited uranium mineralisation further down flow.
Cameco brings significant uranium exploration and development experience to the project.
Red Metal’s strategy of targeting giant ore deposits in many of Australia’s fertile terrains continues to attract major mining companies like Cameco as partners on attractive joint venture terms.