SensOre Ltd (ASX:S3N) subsidiary Exploration Venture AI Pty Ltd (EXAI) has signed a farm-in agreement with Gateway Mining Ltd (ASX:GML) for its Montague Gold Project in WA’s Murchison region.
EXAI is the vehicle for SensOre’s collaboration with German-based Deutsche Rohstoff AG.
SensOre will fund up to $4.5 million in lithium-focused exploration over 4.5 years to earn 80% of the lithium rights at the Montague Gold Project
SensOre will explore selected tenements within the project for lithium (and related by-products), utilising its proprietary SensOre DPT© technology to generate targets for field activities.
S3N is a geoscience technology disruptor which plans to utilise the proprietary SensOre DPT© artificial intelligence tool to generate targets within the tenements to explore for lithium.
This exploration will be undertaken in parallel with Gateway’s ongoing gold exploration activities. There has been no lithium exploration activities undertaken yet at the Montague Gold Project.
Gateway will retain all other mineral rights (including precious and base metals) within the tenements subject to the agreement.
SensOre’s CEO Richard Taylor said of the agreement, “We are excited by the opportunity for the EXAI joint venture to work with Gateway.
"The agreement with Gateway brings another AI-generated lithium target into the EXAI portfolio which we are developing with Deutsche Rohstoff AG.”
Gateway’s managing director Mark Cossom said: “This is a fantastic opportunity for Gateway, allowing a specialist exploration group to bring their proprietary technology to bear to potentially unlock the lithium potential of our tenements – without Gateway having to redirect its resources away from its core gold exploration activities."
Terms of agreement
SensOre is set to spend an initial $1.5 million (including a minimum of $750,000 in direct drilling expenditure) to earn a 51% interest in the lithium (and related by-product) rights within the selected tenements.
An additional $3 million (including a minimum of $1.5 million in direct drilling costs) to earn an additional 29% interest in the lithium (and related by-product) rights within the selected tenements.
Note, Gateway is free-carried to delivery of a bankable feasibility study (BFS), with the option to claw back a further 10% interest in the lithium (and related by-product) rights.
- EXAI to acquire up to 80% of lithium rights only. Ownership of all other minerals will be owned by Gateway and Gateway Projects.
- Where any conflicts arise as to exploration activities within the tenements between Gateway and EXAI, the priority of exploration will be given to Gateway to conduct its exploration within the tenements.
- The agreement consists of a three-stage farm-in for EXAI to ultimately acquire 80% of the lithium rights (and related by-products) within the tenements on the following terms:
(b) Exploration expenditure of $1.5 million excluding GST (with $750,000 of the expenditure to be direct drilling expenditure) within 2.5 years of the earn-in commencing to earn a 51% interest in the lithium rights within the tenements (first earn-in).
(c) Exploration expenditure of a further $3,000,000 excluding GST (with $1,500,000 of the expenditure to be direct drilling expenditure) within two years of completion of the first earn-in commencing to earn a further 29% interest in the lithium rights within tenements (second earn-in).
(d) The parties have agreed to negotiate in good faith and enter into a formal joint venture agreement as soon as practicable after EXAI earns the first earn-in.
(e) Should EXAI earn both the first earn-in and second earn-in, Gateway will have the option to claw back a further 10% interest in the lithium rights from EXAI, and Gateway will pay to EXAI cash consideration in the amount of three times the total expenditure paid by EXAI within the tenements during the earn-in period pro-rata to the 10% interest Gateway is entitled to acquire (clawback option).
(f) Provided Gateway does not exercise its clawback option, the remaining lithium rights held by Gateway will be free-carried until a bankable feasibility study is completed in relation to lithium minerals.
- EXAI will not earn or acquire any interest in the lithium rights to the extent that such rights (and all other mineral rights) are owned by Estuary Resources Pty Ltd who hold a 25% interest M57/485 and E57/793 (Estuary JV tenements).
- EXAI’s right to farm-in and acquire an interest under the agreement is conditional on the following:
(b) Gateway giving EXAI written notice confirming Estuary waiving or not exercising its pre-emption rights in relation to the Estuary JV tenements, (collectively, the conditions).
The conditions must be satisfied within 90 days of execution of the letter agreement (end date).