Fortescue Metals Group has signed a conditional farm-in and joint venture agreement with Perth-based Tasman Resources for an exploration project in South Australia.
The agreement covers Tasman’s Vulcan iron oxide-copper-gold-uranium prospect, which is located approximately 30 kilometres north of BHP’s Olympic Dam mine.
Shares in Tasman were up 17.9 per cent to trade at 3.3 cents at 2.05pm AEST.
Under the agreement, Fortescue can earn a 51 per cent interest in the project by sole funding $4 million on exploration expenditure within a three-year period.
Fortescue must expend a minimum of $1 million before it can withdraw from the agreement, and will earn no interest if withdraws before spending $4 million.
After earning a 51 per cent interest Fortescue may choose to increase its joint venture interest to 80 per cent by sole funding a further $7 million on exploration within a further five-year period.
Fortescue will be the manager of the project both while earning its interest and during the joint venture.
The farm-in is the latest of several exploration projects backed by Fortescue, which is seeking growth and diuversification opportunities beyond its Pilbara iron ore operations.