Metalla Royalty & Streaming Ltd (NYSEAMERICAN:MTA) (CVE:MTA) said Tuesday that Sandfire Resources Ltd (ASX:SFR) has entered into a farm-in agreement with CBH Resources Ltd to earn-in up to a 100% interest in the Endeavor mine and surrounding exploration tenements.
The Endeavor mine is a zinc, lead, and silver deposit located near Cobar, New South Wales. Metalla holds a 100% by-product silver stream on the Endeavor mine.
"We are thrilled to welcome Sandfire Resources as a new counterparty into one of the most prolific base metal belts in Australia,” said Metalla CEO Brett Heath in a statement.
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“Sandfire is a well-capitalized producer with technical and geological expertise that will provide the Endeavor project with the potential for future discoveries and a path to restarting production. The new farm-in agreement will provide Metalla with prolonged exposure to silver in a high-grade zinc, lead, and silver mine operated by a top tier counterparty," Heath added.
Under the farm-in agreement, Sandfire has the right to earn up to 51% by spending $10 million and 75% by spending $20 million or acquire 100% for a payment of $30 million.
Sandfire will undertake exploration within the surrounding tenements, with the farm-in representing a complementary strategic addition to its East Coast Base Metals Strategy, which already includes an extensive position in the Lachlan Fold Belt. It has disclosed that it will bring its technical exploration and geological expertise to the project, with a focus on exploration within the surrounding tenement package aimed at making new discoveries that could leverage off the existing infrastructure.
Sandfire said it believes the farm-in represents a complementary strategic addition to its East Coast Australia Base Metal Exploration Initiative, which already includes a large ground position in the Lachlan Fold Belt and Cobar Basin in NSW and an extensive portfolio in the Mt Isa region in Queensland.
Metalla said it has the right to buy 100% of the silver production up to 20 million ounces (12.6 million ounces remaining under the contract) from the Endeavor mine for an operating cost contribution of US$1 for each ounce of payable silver, indexed annually for inflation, plus a further increment of 50% of the silver price when the market price of silver exceeds US$7 per ounce.
Metalla consented to the farm-in transaction in accordance with its silver stream agreement.
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