The Lamil Project is a conceptual exploration project with a Telfer look-alike aeromagnetic signature. The project covers 1,375km2, is approximately 90km in length and is located midway between the Telfer gold-copper mine and the Nifty copper mine.
The highly mineralised Paterson Province remains largely underexplored due its remoteness and relatively deep Permian and recent cover. A recent breakthrough, based on a detailed airborne magnetic survey completed by Rumble Resources (ASX:RTR)(“Rumble”) in March 2019, indicates that the depth of cover to the main targets in the Lamil Project area is less than 100m. This estimate was independently confirmed during AIC’s due diligence review. The area has essentially been ignored due to the previous perception of ubiquitous deep (>400m) cover.
The airborne magnetic survey completed by Rumble highlighted a major dome structure (Target P1) which has many important similarities to the world class Telfer gold-copper deposit which lies only 30km to the northeast. Independent interpretation of the airborne magnetic data completed by AIC has confirmed that the Lamil Dome exhibits the key structural features required to potentially host Telfer-style gold and copper mineralisation.
The Lamil Dome (Target P1) appears as a large NNW trending dome (double plunging antiform) inferred over a strike of 8km under Permian and recent cover. The dome has similar characteristics to the Telfer Dome with respect to orientation of the main axial plane, inferred host rocks and size. Importantly the upward continued magnetic imagery at 500m (UC500m) has highlighted an increase in the magnetic response which may indicate a potential underlying intrusion. No previous exploration (drilling or geophysical) has tested this target.
The two tenements that make up the project area, EL45/5270 and EL45/5271 are currently under application. AIC is working with Rumble to expedite the grant of these tenements.
Earn-in and Exploration Joint Venture Agreement
With significant recent discoveries by Rio Tinto Limited at the large Winu copper-gold project and Greatland Gold plc at the exciting Havieron gold-copper project, exploration tenure in the Paterson Province is now highly sought after and consequently the Lamil Project joint venture bid process was very competitive. AIC was able to differentiate its bid by putting forward a true partnership with Rumble. The two companies have complementary expertise and will work collaboratively to advance the Lamil Project.
Both AIC and Rumble believe that there is significant potential for further cooperation between the companies. Rumble is a project incubator and has successfully generated a number of exciting conceptual exploration projects that have been farmed-out and are returning exceptional first pass results. The management team at AIC has substantial experience in project development and has ambitions to become a significant Australian gold and copper mining company through exploration, development and acquisition.
AIC and Rumble have entered into an Earn-in and Exploration Joint Venture Agreement (“EJVA”) and a Share Subscription Agreement. A summary of these agreements is provided below.
- AIC will subscribe for 4,166,667 new shares in Rumble at a price of 6cps for total proceeds of $250,000 within 30 days of the date the EJVA becomes unconditional.
- AIC will issue to Rumble 714,286 new shares in AIC at no cost within 30 days of the date the EJVA becomes unconditional.
Stage 1 Earn-in
- AIC will have the right to earn a 50% interest in the Lamil Project tenements EL45/5270 and EL45/5271 (“Project”) by sole funding $6 million of exploration expenditure (“Stage 1 Earn-in”) over a 4 year period (subject to extension for Force Majeure) from the date of satisfaction or waiver of the conditions precedent in the EJVA (“Stage 1 Earn-in Period”).
- AIC must sole fund a minimum of $2 million within the first 2 years of the Stage 1 Earn-in Period (or otherwise pay to Rumble any shortfall amount) (“Minimum Expenditure Commitment”), after which AIC can elect to withdraw by providing notice to Rumble.
- During the Stage 1 Earn-in Period, the manager of the Project will be AIC.
- Upon completion by AIC of the Stage 1 Earn-in, AIC will issue at no cost to Rumble $250,000 worth of new shares in AIC. The number of shares to be issued will be based on the prior 30-day VWAP of AIC.Upon completion by AIC of the Stage 1 Earn-in, AIC will subscribe for $250,000 worth of new Rumble shares. The number of shares to be subscribed for will be based on the prior 30-day VWAP of Rumble.
Stage 2 Earn-in
- Rumble may elect by notice in writing to AIC within 30 days of the end of the Stage 1 Earn-in Period to contribute to the activities of the Project (“Election Notice”)
- If Rumble provides the Election Notice then the Parties will establish an unincorporated joint venture for the exploration and evaluation of all minerals within the Project and will thereafter contribute to the activities of the Project in proportion to their respective interest in the Joint Venture (i.e. 50/50).
- If Rumble does not provide the Election Notice, then AIC can earn an additional 15% interest in the Project (for a total of 65%) by sole funding an additional $4 million in exploration expenditure (“Stage 2 Earn-in”) over a 12 month period (subject to extension for Force Majeure) following the Stage 1 Earn-in Period (“Stage 2 Earn-in Period”).
- During the Stage 2 Earn-in Period, the manager of the Project will be AIC.
Joint Venture Pro-Rata Period
- Once AIC has completed the Stage 1 Earn-in and if Rumble has provided the Election Notice then the parties will establish an unincorporated exploration joint venture for the exploration and evaluation of all minerals within the Project (“Pro-rata Period”).
- If, however Rumble has not provided the Election Notice then the parties will establish an unincorporated exploration joint venture for the exploration and evaluation of all minerals within the Project and the Pro-rata Period will commence only after the Stage 2 Earn-in has been completed.
- During the Pro-rata Period, for each financial year, each party must give an election notice to the other within 20 business days of an agreed exploration program and budget electing to either:
- contribute to the activities of the Project a portion of cash calls or expenditure that is equal to its interest in the Project; or
- have its interest in the Project diluted, calculated by a standard dilutionary mechanism.
If a party’s interest in the Project dilutes to 10% or less, that party’s interest will automatically convert to a 1.25% net smelter royalty on any minerals produced and sold from the Project.