Chief executive Paul Johnson said: “Power Metal is keen to build its exposure to Australian base and precious metals exploration where there is, in our view, the potential for large scale metal discoveries in a secure and stable operating environment.
“Through our joint venture in the Victoria Goldfields, and subject to due diligence, through this acquisition, we will have operating interests in two of the major centres for exploration activity in Australia.”
The option is over interests in the Paterson Province in the eastern Pilbara Region, a province that is considered highly prospective for gold-copper and base metal mineral systems and currently of particular focus for resource companies, with existing mine and processing infrastructure.
A rush into the Paterson area followed Rio Tinto’s Winu copper and gold discoveries and Greatland Gold PLC’s (LON:GGP) Havieron discovery, with Power Metals noting that several major groups in search of large deposits have entered into joint-venture or farm-in deals with junior explorers to speed up exploratory work.
The option agreement has been signed to acquire a 100% interest in First Development Resources PTY Ltd (FDR), a privately owned Australian company holding the Wallal project and an option to acquire the Ripon Hills project.
Wallal is similar to the structural setting of the Winu discovery and has a 46km strike, Power Metals said, while Ripon Hills is near to ASX-listed Rumble Resources’ base-metal-rich Braeside project.
The option agreement, which allows Power Metal 60 business days to undertake due diligence, also covers the terms to acquire 100% of FDR from its current shareholders, which would see it pay an initial consideration of A$50,000 in cash (£28,304) plus another £150,000 through the issue of 5mln Power Metal ordinary shares. This will see FDR acquired with no liabilities.
The vendors will also be issued 5mln warrants at an exercise price of 4.5p per new share and three years’ life to expiry.
Upon granting of the exploration license application for the Wallal Project and the transfer of the granted exploration license for Ripon Hills, a further £100,000 consideration will be payable through the issue of 2,857,143 new ordinary shares.
An option agreement fee of £30,000 is also to be satisfied through the issue of another 1mln Power Metal new ordinary shares.
Nothing will be paid until the regulatory approvals have been received including any such approval required from Australia’s Foreign Investment Review Board.
“Power Metal is positioning itself to develop a diverse and expansive exploration business in Australia, and this is another important step forward,” Johnson added.