Superior Resources Ltd. entered an earn-in and joint venture agreement with South32 Ltd. to advance exploration at its Nicholson zinc-lead-silver project in Queensland, Australia.
Under the first stage of the joint venture, South32 will immediately fund an initial A$2 million or 4,000 meters of drilling within the first 12 months of operations, with a possibility to extend it for a further three months.
South32 can proceed to the second stage by funding a further A$4 million on exploration within the following four years to earn a 70% interest in the project, with a minimum spending of A$1 million each year.
South32 may then earn an additional 10% interest in the project by electing to start and solely fund a prefeasibility study within six months after the completion of the second stage.
Superior added it will be the operator of the joint venture during the first two stages, after which South32 can assume the role.
After completion of the earn-in, each party will contribute to expenditures in proportion to their respective participating interests.
Additionally, if any party's interest in the joint venture falls below 10%, its stake will be converted to a 1% net smelter royalty.
At least five large geophysical targets have been identified for exploration, according to the May 29 release.
Superior's managing director, Peter Hwang, said drilling is expected to start after the completion of an aboriginal cultural heritage survey scheduled for early June.
In May 2018, Superior resumed control of Nicholson after Teck Resources Ltd. unit Teck Australia Pty Ltd. withdrew from an earn-in and joint venture agreement.