AusQuest surges on South32 venture

Shares in local explorer Ausquest have surged on news the company has struck an agreement with BHP Billiton spin-off South32, with the two companies to form a joint venture over prospective projects.

Ausquest said the two companies would seek to develop a pipeline of copper, zinc and nickel exploration opportunities in Australia and Peru, with Graeme Kerr-led South32 to spend $US4 million on each project that reaches a drill-ready state, in order to acquire a 70 per cent stake.

As part of the three-year agreement, South32 has also agreed to provide Ausquest with a $US1 million interest-free facility over the next two years to help fund project generation work.

Ausquest said five of its existing projects have already been identified by South32 as being of interest, with one accepted as a drill-ready opportunity subject to a $US4 million farm-in joint venture.

Shares in Ausquest were 85.7 per cent higher to 1.3 cents each at the close of trade.

“This is a unique and exciting opportunity for Ausquest to work alongside one of the world’s most successful diversified miners, leveraging our skills as an explorer targeting provincial-scale discovery opportunities,” managing director Graeme Drew said.

“The agreement is structured to give Ausquest the financial capability to identify and evaluate opportunities as well as rewarding the company for success along the way.

“The immediate injection of exploration funds across a number of projects in our portfolio will allow us to get on with the job of generating and evaluating prospects, advancing them to drill-ready status which is where the real value will be.”

South32 shares closed 2 per cent lower to $2.63 each.