AMN - UGANDA: Sipa in Rio Tinto deal for Kitgum Pader

Sipa Resources has signed a joint venture agreement with Rio Tinto Mining & Exploration, a wholly-owned subsidiary of Rio Tinto. The agreement will see Rio acquire an interest in Sipa's Kitgum Pader Nickel-Copper Project in northern Uganda.

Rio has the option to earn up to a 75% interest in the project by incurring exploration expenditure in stages.

Stage 1 involves exploration expenditure of US$12 million within five years, including a minimum commitment of US$2 million to earn 51%.

Stage 2 involves additional exploration expenditure of US15 million within a further three-year period to earn a 65% interest.

An additional US$30 million in exploration expenditure or declaration of a JORC resource of at least 250,000 tonnes of contained nickel or nickel equivalents within a further three years will entitle Rio to earn a 75% interest in stage 3.

In addition, Rio will make $2 million in cash payments to Sipa comprising US$250,000 payable at execution and forming part of project expenditure, US$250,000 after 18 months and US$1.5 million at the start of stage 2.

The JV will allow Sipa to accelerate nickel-copper exploration activities within the broader Kitgum Pader project area, while also continuing to evaluate the Akelikongo discovery, which is emerging as one of the more significant magmatic nickel-copper discoveries globally in the last few years.

Rio Tinto will contribute expertise and funding while Sipa Resources will continue to manage exploration activities in the initial stages of the joint venture, leveraging off its extensive technical and logistical experience operating in Uganda.

Sipa's managing director Lynda Burnett said: "This is a company-defining transaction for Sipa Resources which vindicates our long-term focus on pursuing opportunities to discover new world-class base metal and gold-copper deposits within emerging mineral provinces with Tier-1 potential.

“Attracting a global major such as Rio Tinto to farm-in to the Kitgum Pader project reflects both the enormous potential of the ground and the quality of the work which the Sipa Resources exploration team has completed over the past five years."

Sipa Resources discovered both the Akelikongo nickel-copper system and the Pamwa lead-zinc-silver prospect in 2014 and 2015, and has made excellent progress since then despite budgetary constraints.

The intrusive-hosted, chonolith-style mineralisation at Akelikongo has so far been defined over a strike length of at least 500 metres and remains open, with recent drilling having returned some significant thick zones of disseminated and semi-massive nickel sulphide mineralisation.

The mineralisation exhibits strong similarities to some of the world’s great intrusive-hosted nickel ore bodies, such as Nova, Raglan and Voisey’s Bay.

“The recent application of new geochemical and geophysical techniques has allowed us to further define and understand Akelikongo and surrounds," said Burnett.

"At the same time, our team has now proven that the Kitgum Pader project contains multiple intrusive complexes that exhibit genetic similarities to Akelikongo, highlighting belt-scale nickel discovery potential.

“It is these attributes which make the project one of the most exciting greenfields nickel discoveries in recent years, and we are delighted that Rio Tinto has recognised this potential and will be funding the next stage of exploration.”

www.sipa.com.au