Rio Tinto Mining and Exploration has entered into an earn-in and joint venture agreement with Reservoir Minerals covering Reservoir’s Tilva project in the Timok magmatic complex, Serbia. Reservoir’s recent Cukaru Peki discovery has demonstrated the project’s excellent exploration potential for large-scale copper-gold deposits. Rio Tinto has the option to earn up to a 75% interest in stages by sole funding project expenditures of up to $75 million.
Under stage 1 of the agreement, if Rio Tinto elects to incur total project expenditures of $7 million by November 30, 2019, it will earn a 51% interest in the project. If it incurs additional expenditures of $10 million within three years of the Stage 1 vesting date, it will earn an additional 14% interest in the project (stage 2).
If Rio Tinto incurs further project expenditures of $58 million in connection with the preparation of a pre-feasibility study by the later of the fourth anniversary of the stage 2 vesting date or November 30, 2025, it will earn an additional 10% interest in the Tilva project, resulting in its total interest being 75%.
Rio Tinto has also agreed to minimum project expenditures of $3.1 million by November 30, 2017, including reimbursement of costs incurred by Reservoir on a drilling program that it began on the Tilva project in September, up to a maximum of $500,000, which shall constitute part of its stage 1 earn-in project expenditures.
A management committee will be formed comprised of two representatives each from Rio Tinto and Reservoir. Reservoir will be the initial manager of the project until such time as Rio Tinto exercises its right to assume the role of manager.
The relationship of Reservoir and Rio Tinto will initially be structured as an unincorporated joint venture. Upon notice of Rio Tinto’s intent to earn the stage 2 interest, the parties will form an incorporated joint venture and enter into a more detailed joint-venture agreement.
