ASX-listed minerals exploration company Red Metal has signed an option and joint venture agreement with MMG Exploration to advance the prospective Mallapunyah zinc project in the McArthur Basin in the Northern Territory.
Under the agreement, MMG Exploration (a subsidiary of Dugald River zinc mine owners MMG) will finalise land access negotiations towards the grant of the tenement, over 100km south east of Borroloola.
Once granted, MMG will have the right to earn 70% of the project by completing a bankable feasibility study within seven years. Red Metal will be free carried to a decision to mine.
During the option period, MMG can vest a 60% interest in the project by spending $4 million in the first five years from the grant of the tenement and electing to advance the project towards feasibility.
MMG has committed to a minimum exploration expenditure of $250,000 a year during this time.
Red Metals told the ASX on Monday Mallapunyah holds much promise.
“MMG brings strong local mining expertise to the JV, having recently commissioned the large Dugald River zinc/lead/silver mine and owned the giant Century zinc/lead/silver operation,” the company said.
“MMG (also) has active zinc exploration programs in the region, as well as positive working relationships with the local communities.”
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Exploration on the Mallapunyah project targets zinc/lead/silver deposits similar to Century and Glencore’s McArthur River mines, as well as sedimentary-hosted styles of copper mineralisation.
Red Metal said Teck’s recent success on the Teena project has highlighted the potential for additional deposits in this fertile terrain.