Rio Tinto in JV with Strandline to earn into Tanzania project

PERTH (miningweekly.com) – The exploration arm of mining major Rio Tinto has inked an earn-in and joint venture (JV) agreement with ASX-listed junior Strandline Resources worth up to $10.75-million.

Strandline on Wednesday reported that the JV would allow Strandline to accelerate exploration activities at its heavy mineral sands tenements, in Tanzania, with Rio contributing expertise and funding, while allowing Strandline to concurrently progress its northern projects and pursue additional strategic exploration and development initiatives.

Under the terms of the agreement, Rio can earn an initial 51% participating interest in the relevant tenements by spending $5-million over the first three-and-a-half years, including a mandatory minimum spend of $2-million.

Stage 2 investment will see a further $4-million being spent over the subsequent two years, to earn the diversified miner a 75% interest in the tenements.

Cash payments totalling a further $1.75-million will be made to Strandline as various milestones are achieved, including the 30-day anniversary of the JV effective date, the 30-day anniversary in which Rio gave notice to proceed with the Stage 2 investment, and the 30-day anniversary of Rio earning a 75% interest in the project area.

Once the earn-in period is completed, the two parties will be responsible for contributing to project expenditure, and if a party’s interest falls to below 10%, it can elect to convert its interest to a 2% net smelter royalty, capped at $25-million a producing mine.

Meanwhile, while Rio maintains a 75% shareholding the company will have exclusive marketing rights in relation to the heavy mineral sands mines producing from the project area.

Strandline MD and CEO Luke Graham said on Wednesday that Rio’s involvement in the project was a confirmation of its potential.

“The transaction delivers a strong source of funding and regional mineral sands expertise to significantly enhance the development potential of the company’s southern ground in Tanzania, with a view to ultimately developing one or more economic mineral sands mines.”

The southern tenements include the Miteja, Kiswere, Sudi and Mtwara prospects, extending along some 350 km of Tanzanian coastline.

Exploration activities will start as soon as practicable, to take advantage of the current exploration season, with Strandline to act as project manager until Rio has earned its 51% participating interest.