30/09/2014 - 10:05

Japanese farm-in on Peel project

30/09/2014 - 10:05

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Shares in Perth-based metals explorer Peel Mining have surged on news it would receive up to $7 million through a farm-in agreement with Japan Oil, Gas and Metals National Corporation.

Japanese farm-in on Peel project

Shares in Perth-based metals explorer Peel Mining have surged on news it would receive up to $7 million through a farm-in agreement with Japan Oil, Gas and Metals National Corporation.

Under the terms of the agreement, JOGMEC has the option to earn up to 50 per cent of Peel’s exploration tenements at its Cobar Superbasin project in NSW.

JOGMEC is a Japanese government independent institution which "seeks to secure stable resource supply for Japan".

It has an initial right to earn a 40 per cent interest by funding $4 million for exploration costs and can earn an extra 10 per cent interest by funding an extra $3 million.

If JOGMEC earns a 50 per cent interest, the two companies will become joint venture partners.

“This is a great outcome for Peel at a time when funding for exploration activities is difficult,” Peel managing director Robert Tyson said.

“The JOGMEC deal gives Peel a clear path for exploration on the Cobar Superbasin assets in the medium term, and along with the co-funding agreements with the NSW government, provide Peel and JOGMEC the best opportunity for exploration success.

“Exploration has been ongoing throughout the year and resulted in the delineation of several priority targets which we plan to commence drilling on in the near term.”

Peel will act as operator of the project during the farm-in.

However, if JOGMEC becomes a majority shareholder then the Japanese division will have the right to appoint an operator of their choosing.

Peel’s share price rose by 17.6 per cent to 10 cents per share at 10am.

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