Riedel soars on FMG farm-in deal

Shares in West Perth explorer Riedel Resources have skyrocketed after Fortescue Metals Group agreed to farm-in to its Charteris Creek tenement in a deal worth up to $1 million.

The 131 square kilometre tenement is located about 50 kilometres south east of Marble Bar in the Pilbara region, and is thought to hold potential for iron ore, gold, copper and base metals discoveries.

Under the terms of a joint venture agreement between the two companies, FMG can earn a 51 per cent interest in the tenement by spending $200,000 on exploration within the area within the next three years.

FMG will then have the option of incrementally boosting its stake up to 80 per cent by spending $1 million on exploration within an additional three-year period commencing from the date of the initial earn-in. 

The two parties will then contribute to expenditure relative to their interest in the joint venture, with interest converted to a net smelter royalty if either party's stake falls below 10 per cent. 

Riedel shares closed the day's trade 100 per cent higher on news of the deal at 3 cents.