Hannans signs Reed for Lake Johnston JV

Perth exploration firm Hannans Reward has entered into a joint venture agreement with Reed Resources at the Lake Johnston nickel sulphide project west of Norseman.

Under terms of the agreement, Hannans will retain a 20 per cent interest in the project, while any decision to mine will be made by Reed.

Hannans said it would not be obligated to fund exploration expenditure until a decision to mine was announced by Reed.

If it elects not to contribute, Hannans' interest will convert to a 2 per cent net smelter return royalty.

Reed’s nickel sulphide specialists Gordon Kelly and Richard Stuart completed due diligence on Hannans’ portfolio of nickel sulphide exploration projects during the past 15 months, and in particular the Mt Gordon nickel sulphide prospect at Lake Johnston.

Hannans said it chose to enter into an agreement with Reed because Mr Kelly and Mr Stuart had the technical expertise required to effectively test Mt Gordon, thereby providing Hannans’ shareholders with exposure to future exploration success.

Reed has been struggling to stay afloat since it handed its Meekatharra gold operation into the hands of administrators last year, which detailed $70 million of asset impairments.

Metals X bought the Meekatharra gold operations for $7.7 million in May.

In 2012, Hannans intersected nickel sulphide mineralisation in a drillhole while testing the copper-nickel auger geochemistry anomaly at Mt Gordon.

Last year, a geochemical analysis of drill samples confirmed the presence of a fertile, high-MgO reduced komatiite with the potential to host high-tenor nickel sulphides.

Hannan’s share price rose by 20 per cent to 0.6 cents at 11:40am WST.