Rio Tinto and Vancouver-based Midnight Sun Mining have signed a US $51m joint venture agreement. The agreement will see the Anglo-Australian firm earn up to a 75% interest in the latter’s Solwezi licenses.
According to media reports, the Solwezi licenses comprise two individual exploration licenses totalling 506 square kilometres situated in the North-Western Province of Zambia, adjacent to First Quantum Minerals’ Kansanshi mine.
Further and as part of the agreement, Rio Tinto will make an initial payment of US $700,000 to Midnight Sun, as well as fund an initial work program on the Solwezi licenses by spending US $3m, of which US $2m is a firm commitment, within the next two field seasons. An additional US $300,000 will be paid to Midnight Sun upon completion before Rio proceeds with the final expenditures.
The completion of the initial work will earn Rio 51% ownership of the Solwezi licenses by incurring a further US $16m in work expenditures within four years and making a total of US $1m in additional scheduled cash payments to Midnight Sun.
The company can then earn an additional 14% ownership of the licenses by incurring another US $14m in work expenditures or completing a feasibility study within three years, and making an additional US $1m in cash payments to Midnight Sun.
Afterwards, Rio Tinto can earn a further 10% ownership by spending an additional US $15m on work within two years. All these will thus total up Rio’s expenditure to US $51m for the 75% stake in Solwezi copper deposits.