- Renascor Resources has entered a binding agreement with Rio Tinto Exploration concerning EL 5586, part of the Marree Project in the Adelaide Fold Belt of South Australia.
- Rio Tinto Exploration may earn an interest of 80% in EL 5586 by making staged payments of $0.2 million to Renascor over a period of two years.
- The agreement is also subject to Rio Tinto Exploration electing to continue sole funding exploration expenditure of $3 million on EL 5586 within five years of the date of the farm-in agreement.
- The current and upcoming work programs of Renascor Resources are focused at the Siviour Battery Anode Material Project and the Carnding Gold Project.
The successive string of developments undertaken by ASX-listed explorer and developer Renascor Resources Limited (ASX: RNU) appears to have given a boost to its project pipeline in South Australia. Taking another strategic step forward down the same road, the Company has secured a binding agreement with Rio Tinto Exploration.
The agreement is regarding EL 5586, which is a part of the Company’s Marree Project in the Adelaide Fold Belt of South Australia. The agreement offers Renascor the opportunity to utilise the resources and exploration expertise of Rio Tinto Exploration and maintain its focus on core projects having near-term potential promising for delivering significant value uplift.
Renascor holds a healthy cash balance following the recently completed capital raising of $3.6 million. As of 30 September 2020, RNU has approximately $5.2 million cash on hand.
Lens on the Agreement
Renascor’s binding farm-in and joint venture agreement is regarding EL 5586 with Rio Tinto Exploration Pty Limited, which is a wholly owned subsidiary of Rio Tinto Limited (ASX: RIO). EL 5586 together with EL 6170 and EL 6403, form the Marree Project of Renascor Resources.
Under the terms of the agreement, Rio Tinto Exploration may earn an interest of 80% in EL 5586 by making staged payments of $0.2 million to Renascor over a period of two years. The agreement is also subject to Rio Tinto Exploration electing to continue sole funding exploration expenditure of $3 million on EL 5586 within five years of the date of the farm-in agreement.
Rio Tinto Exploration would manage exploration programs while also maintaining statutory expenditures during the earn-in period.
If Rio Tinto Exploration meets the earn-in requirements, a joint venture between Rio Tinto Exploration and Renascor will be formed. The JV would involve both parties contributing on a pro-rata basis (80% Rio Tinto Exploration and 20% Renascor). The parties can also dilute their respective interests. In case the interest of either party falls below 5%, the interest will convert to a net smelter royalty of 1.25% on the initial 12 years of production.
Renascor will retain a 100% stake in the rest of the exploration licences (EL 6170 and EL 6403) that are part of the Marree Project.
Current and Upcoming Work Programs for Renascor Resources
The current activities of Renascor are focused on its wholly owned Siviour Battery Anode Materials Project as well as Carnding Gold Project. Work programs include:
Siviour Battery Anode Materials Project
- Its ongoing work at Siviour includes sample preparation, offtake marketing, and advanced battery and metallurgical testing.
- Renascor is undertaking additional offtake discussions currently with anode and lithium-ion battery companies based in Northeast Asia and Europe.
- The activities are primarily committed to undertaking Purified Spherical Graphite validation tests along with providing responses to due diligence enquiries and negotiating potential offtake terms.
Carnding Gold Project
The Company recently completed ground clearance surveys and geological mapping. Ongoing and further works at the project include:
- Renascor is preparing for drill-testing of the shallow, high-grade Soyuz gold prospect.
- The Company intends to conduct geochemical sampling and further induced polarisation surveys in November this year.
- Renascor would commence pending regulatory approval, drill rig availability and drill-testing in the ongoing or next quarter.
RNU stock traded at $0.011 on 28 October 2020 (AEST 1:13 PM), up ~10% on the pervious close.