Sipa shares up on Rio farm-in

Sipa Resources has signed a farm-in deal with Rio Tinto, which will spend up to $12 million to explore Sipa’s flagship copper-gold project in Western Australia.

The news sent Sipa’s shares up by as much as 17 per cent today, with the Subiaco-based company trading at 10 cents per share at 11:00am AEST.

Rio will spend a minimum of $3 million within 2.5 years to explore the Paterson North project, which will include at least 4,000 metre of drilling.

Rio has the option of spending a further $3 million to earn a 55 per cent, joint venture interest in the project, and an additional $6 million to gain a 70 per cent stake.

The final earn-in stage would require Rio to sole fund exploration expenditure to the delivery of a JORC Mineral Resource estimate for Paterson North with an in-situ value of at least $1 billion, upon which Rio would earn an 80 per cent JV interest.

Sipa managing director Pip Darvall said attracting a global major like Rio reflected the enormous potential of the Paterson North project.

She said Sipa had been progressing exploration in the Northern Paterson since 2016.

Hartleys is acting as corporate adviser to Sipa on the transaction.

Sipa shares had dropped back to 9.2 cents per share, closing up 8.2 per cent on its last traded price.