Strategic Energy Resources (SER) has entered into a non-binding term sheet for an exploration joint venture (JV) in Australia with Sumitomo Metal Mining Oceania (SMMO), a subsidiary of Sumitomo Metal Mining.
This agreement pertains to the Bulimba Gold Project, which is fully owned by SER. The project is situated roughly 50km north-west of Chillagoe in north-eastern Queensland.
It encompasses the extensions of the Palmerville/Gamboola Fault Zone, which hosts several significant gold-copper deposits, including the Mungana and Red Dome deposits.
These deposits have a combined resource of 2.7 million ounces (moz) of gold, 273,000t of copper and 34moz of silver.
This agreement allows Sumitomo to earn up to an 80% interest in the project through an expenditure of A$6m ($4.02m) and 7,500m of drilling over five years.
An additional 10% interest can be earned by completing a definitive feasibility study (DFS).
Strategic Energy Resources managing director David DeTata said: “The Bulimba project is located in the heart of the north-east Queensland intrusion-related gold province, which is host to over a 20-plus moz gold endowment.
“With the signing of this term sheet, SER has secured a long-term partner that ensures the project will be systematically explored and funded right through to DFS stage. We look forward to working alongside SMMO in our combined search for Australia’s next mineral discovery”.
The exploration agreement encompasses four exploration licences, identified as EPM28877 through EPM28880, with an option to include additional adjoining tenements.
Within 14 days of executing the agreement, Sumitomo is required to reimburse SER A$100,000 for a portion of the expenditures already committed.
Sumitomo must commit to a minimum expenditure of A$600,000 within the first 12 months, after which it may withdraw, allowing SER to retain full ownership of the project.
For the first earn-in phase, Sumitomo can acquire an initial 51% interest in the project by spending A$3m over three years, which must include at least 2,500m of drilling.
In the second earn-in phase, Sumitomo can increase its stake to 80% by investing an additional $3m over two years, which must include a minimum of 5,000m of drilling, in addition to the drilling from the first phase.
Sumitomo can achieve a 90% interest upon completing a DFS on a resource exceeding 1moz of gold equivalent within a five-year period.
SER will be free-carried until Sumitomo decides to enter the pro-rata expenditure period after completing any of the earn-in phases.
If either party’s interest falls below 10%, it will convert to a 2% net smelter return royalty.
