Hillgrove Resources (ASX:HGO), its unit Mutooroo Copper, Havilah Resources (ASX:HAV), and its subsidiary Copper Aura entered into a binding agreement giving Hillgrove the right to earn an 80% interest in the Mutooroo copper project in South Australia, according to a Wednesday Australian bourse filing.
They executed a farm-in agreement contemplating the formation of an unincorporated joint venture. Hillgrove believes the project has the potential to lift Hillgrove's copper production beyond 20,000 tonnes per annum, subject to further test work and the outcomes of the prefeasibility study.
Hillgrove will issue an up-front consideration of AU$5 million in Hillgrove fully paid ordinary shares as well as one attaching unlisted option per share issued, using its current available placement capacity, subject to the renewal of exploration license 6592 on reasonably acceptable terms. It will also invest up to AU$10 million, including a commitment to 5,000 meters of drilling for resource definition, over an earn-in period of up to 24 months.
Hillgrove could earn an 80% interest in the project upon a final investment decision, via the payment of stage 2 consideration of AU$35 million, in both cash and fully paid ordinary shares. The stage 2 consideration and transfer of an 80% interest in Mutooroo are subject to satisfaction of certain customary conditions.
Havilah's shares rose over 7% in recent trading on Thursday, while those of Hillgrove climbed over 4%.