Encounter Resources expands South32 farm-in tenure for Jessica Copper project

Encounter Resources Limited (ASX: ENRL) is pleased to announce the significant expansion of the farm-in tenure for the Jessica copper project in the Northern Territory (NT).

The expansion comes ahead of the commencement of maiden diamond drilling scheduled for next month.

The project is being explored under a farm-in agreement with South32 (ASX: S32), a partnership that aims to unlock the copper potential in the region.

Reprocessing of seismic lines has provided further clarity on potential drill targets, and Encounter Resources plans to initiate maiden diamond drilling, covering a distance of 3,500m, in June or July 2023.

In addition to the original Jessica tenure, a target generation process has highlighted promising copper prospects adjacent to the project, leading to an expansion of the farm-in tenure by approximately 60%.

The expanded tenure now encompasses approximately 10,300km² along key structural corridors east of Tennant Creek, which are known to be prospective for sediment-hosted and IOCG-style copper deposits.

South32, as part of the farm-in agreement, will be funding the initial exploration activities at the Jessica copper project, while Encounter Resources will be carried through the completion of a scoping study.

As per the agreement, South32 has the opportunity to earn an initial 60% interest in the project by investing $15m in exploration expenditure over a period of ten years.

Furthermore, South32 may earn an additional 15% interest upon successful completion of a Scoping Study.

Encounter Resources managing director Will Robinson expressed his enthusiasm for the expanded tenure and upcoming drilling activities.

“In 2022, we conducted comprehensive seismic coverage and gravity surveys, which generated drilling targets for the Jessica project in 2023,” he said.

“This exercise also revealed compelling new targets adjacent to Jessica, leading to the expansion of South32’s farm-in tenure.

“We are excited to commence diamond drilling of the initial targets identified within the original Jessica tenure next month.”

The Jessica copper project covers a vast area of approximately 10,300km² along key structural corridors east of Tennant Creek.

The project is prospective for sediment-hosted copper and IOCG-style deposits.

HiSeis conducted seismic reprocessing, providing detailed information about the geology and structure within the upper 1,000m.

Additionally, a gravity survey with 2km spacing and gravity infill data collection at 1km spacing over high-priority magnetic targets were completed.

These surveys have identified several targets, including the Zeta IOCG target, characterised by a significant gravity feature coinciding with a prominent magnetic feature on the margin of a large interpreted intrusive body.

A seismic reflector underlying Zeta has also been discovered.

The diamond drilling program, scheduled to commence in June or July 2023, will involve four diamond drill holes, covering a distance of 3,500m.

The aim is to further explore the potential of the Jessica copper project and validate the identified targets.

The farm-in and joint venture agreements between Encounter Resources and South32 outline the key terms of their collaboration.

South32 has the right to earn a 60% interest in Jessica by solely funding $15m of exploration expenditure within a ten-year period.

During the farm-in phase or joint venture period, South32 may earn an additional 15% interest in Jessica by completing a Scoping Study.

Once South32 achieves the Initial Interest or Further Interest, a joint venture will be formed, with a 60:40 or 75:25 ownership split.

The parties involved will contribute funds based on their pro-rata interest or dilute according to a standard dilution formula.

If a party’s interest dilutes to below 10%, it will automatically convert to a net smelter return royalty.

South32 will act as the project manager during the farm-in phase, and a technical committee consisting of representatives from Encounter Resources and South32 will review and approve annual exploration programs and budgets.

Decisions within the technical committee will be made by majority vote, with South32 holding the casting vote.

Encounter Resources Limited’s primary focus is on the discovery of major copper deposits in Australia.

In addition to the Jessica copper project, Encounter controls a substantial portfolio of 100% owned projects in Australia’s most promising mineral provinces, with prospects for copper, rare earths, and lithium.

The company is actively advancing several large-scale copper projects through farm-in agreements with industry-leading miners such as BHP, South32 and IGO.