Rio Tinto will work with junior explorer Sipa Resources in Uganda, Africa to advance a nickel-copper project that has the potential to be globally significant.
The two companies have signed an earn-in and joint venture agreement giving Rio Tinto the opportunity to acquire up to 75 per cent of Sipa’s Jitgum Pader base metals project in northern Uganda.
Rio Tinto can fund up to $US57 million ($75 million) on exploration over 11 years and make a $US2 million cash payment to secure this ownership of the project.
The JV will allow Sipa to accelerate nickel-copper exploration activities at Kitgum Pader, as well as the continued evaluation of the Akelikongo discovery, which has emerged as a significant magmatic nickel-copper prospect.
Perth-based Sipa will continue to manage exploration activities in the initial stages of the agreement as Rio provides funding and expertise.
Lynda Burnett, Sipa managing director, described the agreement with Rio as a company-defining transaction.
Burnett believes the agreement vindicates the junior company’s long-term focus on pursuing opportunities to discover new world-class base metal and gold-copper deposits within emerging mineral provinces.
“Attracting a global major such as Rio Tinto to farm-in to the Kitgum Pader project reflects both the enormous potential of the ground and the quality of the work which the Sipa exploration team has completed over the past five years,” Burnett said.
Sipa discovered the Akelikongo nickel-copper system and Pamwa lead-zinc-silver prospect in 2014 and 2015.
The intrusive-hosted, chonolith-style mineralisation at Akelikongo has been defined over a strike length of at least 500m and remains open, with thick zones of disseminated and semi-massive nickel sulphide mineralisation returned during recent drilling, according to Burnett.
“The recent application of new geochemical and geophysical techniques has allowed us to further define and understand Akelikongo and surrounds. At the same time, our team has now proven that the Kitgum Pader project contains multiple intrusive complexes that exhibit genetic similarities to Akelikongo, highlighting belt-scale nickel discovery potential,” Burnett said.
The three-stage earn-in agreement requires $US12 million of expenditure within five years to earn a 51 per cent interest; a further $US15 million within three years to earn a 65 per cent stake; and a further $US30 million or the declaration of a JORC resource of at 250,000t of contained nickel or nickel equivalents within three years.