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(Alliance News) - Corcel PLC on Wednesday said it has entered into a farm-out and joint venture agreement with Riversgold Ltd covering its recently acquired rare earth elements project at Mt Weld in Laverton, Australia.
Corcel is a London-based mining company with operations in south east Asia and Australia. Its shares were up 18% to 0.27 pence each in London on Wednesday morning.
In December, Corcel exercised its options to buy Mt Weld for GBP200,000 in total. The project is a granted mineral tenement, located 1.4 kilometres west-north-west of Lynas Rare Earths Ltd in Western Australia.
On Wednesday, Corcel said it has entered a farm-out and joint venture agreement with Riversgold. Riversgold is a natural resource exploration business listed on the ASX.
Under the agreement, Riversgold will make an immediate payment to Corcel of AUD30,000, around GBP17,089, and will also commit to funding 100% of an initial exploration programme of AUD500,000.
It expects the initial exploration programme to be completed in 2023.
Following this, Riversgold will earn a 50% interest in the project. However, if it fails to spend AUD500,000, then it will be deemed to have withdrawn from the farm-in agreement and will retain no interest in the project.
As part of the farm in, there is a minimum initial carried spend of AUD100,000, Corcel added.
Corcel also has the right to offer Riversgold an additional 20% for a further AUD1.0 million investment.
Together, Corcel and Riversgold will operate the project as an industry standard joint venture with Riversgold managing the tenements and operating as exploration manager.
Chief Executive Officer Scott Kaintz said: "We are delighted to follow directly our acquisition of Mt Weld with a farm out of half of the position to fund 100% of the near-term development and exploration costs. This is highly accretive against our acquisition cost and further reinforces the board's view of the project's immediate potential upside and overall attractiveness."
By Sophie Rose, Alliance News reporter
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