The newly penned deal replaces a previous farm-in and joint venture between the two companies. Laramide will pay AU$450,000 in three instalments for sole rights to the site.
Laramide Resources (TSX:LAM,ASX:LAM) has entered into a sale-and-purchase agreement with a Rio Tinto (LSE:RIO,ASX:RIO,NYSE:RIO) subsidiary to procure the Murphy uranium tenements in Australia’s Northern Territory.
The newly penned agreement replaces a previous farm in and joint venture between the two companies. The former deal gave Laramide a 51-percent earn in; under the new arrangement, Laramide will pay AU$450,000 in three instalments for sole rights to the Murphy site.
The uranium tenements are located within the Murphy uranium province and are comprised of two exploration licenses, EL 9319 and EL 9414. They also contain several associated license applications spanning over 683 square kilometers.
This particular region of Australia has not seen extensive exploration since the 1970s.
The agreement between the two companies allows for Rio Tinto to have clawback rights, a production payment, a NSR royalty and rights of first refusal. The one-time clawback rights can be exercised if Laramide discovers and develops a measured and indicated mineral resource on the project with an in-situ value estimated in excess of US$1 billion.
In addition to the Murphy tenements, Laramide is also the 100-percent owner of the Westmoreland uranium project in Northwest Queensland.
Westmoreland has already proven valuable for the company. It has an indicated mineral resource totaling 36 million pounds of uranium contained in 18.7 million tonnes at an average grade of 0.089 percent U3O8, and an inferred mineral resource totaling 15.9 million pounds of uranium contained in 9 million tonnes at an average grade of 0.083 percent U3O8.
The Murphy project, which is located along strike from Westmoreland, is comprised of 683.5 square kilometers of granted exploration tenure.
According to a company press release, the acquisition of the tenements will enhance Laramide’s presence in an area believed to be highly prospective and underexplored.
“The Northern Territory of Australia is a jurisdiction that is supportive of both uranium development and mining and hosts several well-known deposits including the Ranger mine which has produced in excess of 120,000 tonnes of U3O8 over a 35-year period,” notes the release.
“The new agreement is structured to incentivize a return to active exploration on the project while providing RTX with an opportunity to participate should a world class discovery be made,” it also states.
The final payment from Laramide to Rio Tinto is scheduled to occur 24 months after the deal’s closing date. Laramide’s share price was up slightly on Tuesday (July 17), opening at C$0.26.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.