Comet Resources Limited (ASX:CRL) intends to acquire a copper exploration project in northern New South Wales with the intention of benefiting from strong copper market fundamentals.
The 2,375-hectare exploration licence covers the project area EL8492 and is near the town of
Barraba, around 550 kilometres north of Sydney.
The region is known to host volcanogenic massive sulphide (VMS) style mineralisation containing copper, zinc, lead and precious metals.
Historical workings at Gulf Creek within the tenement produced high-grade copper and zinc for a short period around the turn of the 19th century.
This area will form a key part of the initial exploration focus.
The company believes that the project complements its existing Springdale Graphite Project in WA, due to their shared end uses in batteries for electric vehicles (EVs).
It also believes the project will help to better utilise available board and management resources with the aim of driving shareholder value.
Comet managing director Matthew O’Kane said: “It is an exciting opportunity for Comet to be able to acquire the Barraba Project as it is in a prospective location and hosts a number of drill-ready targets.
“We will be working hard to be in a position to test the project’s prospectivity as soon as possible after completion.”
The proposed transaction allows for an acquisition of up to 100% of the project from current
registered holder Jonathan Downes, who is not a related party of the company or a shareholder in the company.
Comet has a conditional right to acquire an 80% interest for consideration of $150,000 cash and $450,000 in shares and a commitment for the completion of a minimum drilling and exploration expenditure program over the 18 months from date of acquisition.
The minimum exploration commitment is $600,000 with a minimum of 1,250 metres of reverse circulation (RC) or diamond drilling to be completed to earn the 80% interest.
The vendors are free-carried until a decision to mine has been reached at which point they contribute pro rata in a JV or dilute to a 2% royalty.
Comet also has the option to purchase the remaining 20% interest in the first 36 months for $2.5 million.
The company is required to raise a minimum of $2 million to fund exploration as a condition precedent of the transaction and, if the capital raising is to be completed by way of a placement, will seek shareholder approval for the issue of these shares at a general meeting.
This funding will support an exploration program including geophysics (surface and downhole) as well as targeted RC or diamond drilling.
Comet believes that copper is set to see an increase in demand due to the global efforts to reduce emissions from the transport network and from electricity generation.
Copper is not only an important part of the batteries used in electric vehicles (EVs) but is also used extensively in the electric motors that drive the wheels of EVs and is also used intensively in the generation of electricity from renewables, such as solar and wind.