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South32 unit signs US$100M option deal over Silver Bull's Sierra Mojada project

Silver Bull Resources Inc. signed an agreement granting a South32 Ltd. unit the option to acquire a 70% stake in the former's Sierra Mojada zinc project in Mexico for US$100 million and form a 70/30 joint venture over the property, Silver Bull said June 4.

The transaction will see the South32 unit subscribing for 70% of the shares of Silver Bull's Minera Metalin SA de CV, which holds the Sierra Mojada claims. The cash consideration will include a minimum exploration spend of US$10 million, to be spent during the four-year option period, to maintain the option in good standing.

South32 will have 30 days prior to each anniversary of the option agreement to decide whether to fund the next tranche of required exploration funding. Should the company exercise the option, the remaining US$90 million will be due and paid to Metalin in one tranche within 60 days; if not, the option will lapse, and Silver Bull will retain a 100% interest in Sierra Mojada.

If the companies proceed with a joint venture, and after the US$100 million has been spent on exploration and development, the parties will contribute funding based on their project stakes. South32 will appoint Metalin's CEO, while Metalin's board will comprise a proportionate number of Silver Bull and South32 nominees.

According to Silver Bull, the first-year exploration program at Sierra Mojada is planned as soon as possible and includes an airborne electromagnetic survey and a targeted drill program. This program will be initially managed by Silver Bull.