Fe Limited (ASX:FEL) is set to benefit directly and indirectly from the acquisition by active Bryah Basin miner and explorer Sandfire Resources NL (ASX:SFR) to acquire further farm-in rights to base metals.
The agreement covers tenements that are 100% held by Alchemy Resources Limited (ASX:ALY) as well as those held 80% by Alchemy and 20% by Fe Limited subsidiary Jackson Minerals Pty Ltd.
Fe shares increased 10% intra-day to 2.2 cents.
“Win-win” for Fe Limited
Fe chairman Tony Sage said the increased Sandfire involvement in the Bryah Basin was a win-win for the company.
Not only would the agreement directly benefit Fe Limited’s stake in the Bryah Basin Project, he said, but it would also indirectly flow on to the company’s other interests in the region.
“This is an encouraging development as it will mean a significant ramp-up of exploration on tenements that have strong base metals potential.
“Sandfire has the means and incentive to realise this potential and for any discoveries made, Fe Limited is 20% free carried to a decision to mine,” he said.
If Jackson Minerals elects not to contribute to any resulting mining activities, it must sell its interest or convert to a $10 per recovered ounce of gold royalty and copper.
The agreement covers 60 strike kilometres of prospective stratigraphy within the Bryah Basin Project.
The Alchemy-Sandfire farm-in tenements in the Bryah Basin Project.
Sandfire can earn an 80% interest in Alchemy’s 100% held tenements and 70% in the joint tenements by sole funding $3.1 million on exploration over 15 months.
The Deed of Covenant - Letter Agreement covers all commodities, except iron ore.
DeGrussa operations nearby
Should a high-value base metal discovery be made, Sandfire’s processing facilities at the DeGrussa operation, which is just 30 kilometres to the northeast, could be a critical component towards a positive feasibility study.
Sandfire intends to combine its extensive local geological, geophysical and geochemical knowledge gained from exploring and mining the DeGrussa ore body with the work completed by IGO to define base metal targets within the farm-in tenements.
IGO has completed detailed surface electromagnetic work over the strike extensive highly prospective Narracoota/Karalundi Formation contact zone.
Sandfire is farming into Morck Well with the right to earn a 70% interest in the project area, which is 22 kilometres from DeGrussa.
There has been one diamond core hole and three reverse circulation holes drilled by Sandfire following the intersection of highly encouraging mineralisation from aircore drilling in May 2018.
The Morck Well partners are awaiting assays from this program but the sedimentary package intersected is considered to be highly prospective.
Sandfire’s aggressive exploration approach of systematic aircore drilling will be further enhanced by Moving Loop Electromagnetic (MLEM) surveying across the prospective sequence.