Hammer Metals and South32 execute earn-in agreement for Isa Valley

Hammer Metals (ASX: HMX) and South32 (ASX: S32) have executed a letter agreement, providing South32 an option to earn an 80% interest in the Isa Valley project in Queensland.

During the earn-in period, South32 can achieve up to an 80% interest in the project by free-carrying Hammer Metals to the completion of a pre-feasibility study.

The earn-in period is in a stage process with stage one comprising of South32 funding an initial screening ionic leach soil sampling and field assessment of Isa Valley. Costing ranges between $20,000 and $25,000 and must be completed within six months.

For stage two, South32 will fund a drilling program comprising of 900m of drilling, subject to an expenditure cap of $150,000.

The third and final stage will see South32 fund $3m for exploration over three-years. Stage three can be extended by a further year with the spending commitment to increase to $4m.

After this, South32 will have earned a 70% interest in the project and a joint venture will be formed.

On completion of stage three, South32 may earn an additional 10% interest in the joint venture by sole-funding a pre-feasibility study for a mine development and other joint venture expenditure.

Upon earning this further interest, South32 will hold a joint venture interest of 80% with Hammer Metals to hold the remaining 20%.

Hammer Metals managing director Daniel Thomas commented on the agreement and earn-in.

“This earn-in will cover ground that Hammer applied for in 2021 along the highly prospective Mount Isa fault,” he said.

“We look forward to working with South32 and leveraging their knowledge in exploring for large-scale base metal deposits.

“The ability for Hammer to attract another quality partner such as South32 supports our approach in identifying early-stage exploration targets and prospect generation across our broader landholding in northwest Queensland.”