Poised for success? Here are 5 ASX explorers with farm-in agreements with major miners

Nick Sundich Nick Sundich, March 28, 2024

We’re taking a look at ASX explorers with farm-in agreements with major miners in place. Because while there are hundreds of small cap explorers with the odds stacked against them, investors may be more confident in companies that have partnered with major miners.

Yes, it may just be penny change for major miners to get involved, although they would not be if they thought there was nothing to find. Sometimes, major miners even become investors in the company they are partnering with. As the first example below demonstrates, this can be a re-rating catalyst.

None of this is intended to suggest that any companies below will be successful while others have no hope. It is just interesting to observe what major miners decide to do with the capital they have, and which projects to back.

 

5 ASX explorers in farm in agreements with major miners

 

Magmatic Resources (ASX:MAG) with Fortescue

Fortescue has historically been a one-trick pony with iron ore, but it has early-stage hydrogen ambitions. In early March, Magmatic signed a deal with Fortescue for the former company’s Myall copper-gold project.

This deal was worth up to $14m and also saw Twiggy Forrest’s company become a 19.9% cornerstone investor in the company. Fortescue could spent $6m to earn up to a 51% interest in the project itself (but not the company) by spending $6m on exploration. Thereafter, it could a further 24% by incurring an extra $8m and it would sole-fund and manage exploration activities from that point.

 

Dynamic Metals (ASX:DYM) with Min Resources

Wait, what about Delta Lithium you may ask? Mineral Resources is an investor in Delta, but it does not have a farm-in agreement.

Dynamic is a lithium explorer with tenements in WA. It has sold 40% of its rights on its Widgiemooltha Project for $5m to Chris Ellison’s company. MinRes has the right to spend $15m over 4 years to up its stake to 65% and can up it to 80% by solely funding expenditure through to a decision to mine. Of the purchase price, $400k was received on signature, with $3.6m to be paid in the June quarter of CY24 and the last $1m in July 1 2025.

 

Sultan Resources (ASX:SLZ) with Rio Tinto

Sultan has base metals tenements near Lake Grace in WA. It signed a deal with Rio Tinto in June 2023 that had a modest A$25,000 upfront payment, although exploration was early stage, being only surveying rather than drilling.

The deal came with the right to extend it from 6 to 12 months for an extra $25,000 as well as to earn an 80% interest in a JV by funding up to $2m in exploration over the next 5 years. As of early March 2024, so far so good. Following surveying, a drilling campaign is underway at the Calesi prospect within Lake Grace.

 

Olympio Metals (ASX:OLY) with Liontown Resources 

As a WA lithium play, Olympio is inevitably hoping to follow in Liontown’s footsteps. And so in April 2023, the pair signed a farm-in agreement over its Mulline and Mulwarrie lithium projects. At the time, the deal began with a geochemical program with 1,100 soil samples.

Nearly a year and 1,201 geochemistry samples later, the companies signed a formal Joint Venture with drilling exploration. Liontown could earn a 51% interest in both projects by spending A$400,000 over twelve months. Thereafter, either a formal JV could be formed or Liontown could earn a further 39% interest by spending a further $1m within three years.

 

Legacy Minerals (ASX:LGM) with Newmont 

Legacy has the Bauloora gold project in New South Wales. In April 2023, it signed a farm-in deal with Newmont, which is now the owner of Newcrest’s Cadia mine having snapped up the company last year.

The first stage provided for Newmont to spend up to $5m for a 51% stake, of which $2m had to be in the first year and include 4,000m of drilling. In the second stage, Newmont will be entitled to earn a further 24% interest in the tenements by spending an extra $10m and drilling an extra 8,000m.

 

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