AusQuest and South32 Renew Exploration Pact to 2027 with $4.5M Earn-In Deals
AusQuest and South32 have extended their Strategic Alliance Agreement for two more years, securing continued funding and collaboration on Australian copper and zinc projects. South32 will fund exploration to advance projects to drill-ready status and can earn up to 80% interest through staged investments.
- Strategic Alliance Agreement extended to December 2027
- South32 to fund exploration advancing projects to drill-ready stage
- South32 can earn 70% interest per project with US$4.5M expenditure
- AusQuest manages initial programs and receives 15% administration fee
- Incentives include bonus fees for project generation and potential 80% earn-in
Strategic Alliance Extended
AusQuest Limited (ASX, AQD) and South32 Limited have agreed to extend their Strategic Alliance Agreement (SAA) for an additional two years, now running through to December 2027. This extension underscores South32’s ongoing commitment to fund exploration activities on selected AusQuest projects targeting copper and zinc deposits across Australia.
Since its inception in 2017, the alliance has fostered a productive partnership, leveraging AusQuest’s expertise in early-stage exploration and South32’s financial backing to advance promising projects towards development.
Funding and Project Advancement
Under the terms of the renewed agreement, South32 will continue to provide exploration funding to move projects from initial discovery phases to drill-ready status. AusQuest remains responsible for managing these early-stage programs in close consultation with South32, ensuring efficient progression.
Once projects reach the drill-ready stage, South32 has the option to earn a 70% interest by investing US$4.5 million in each project. This staged earn-in model aligns incentives, allowing South32 to deepen its stake based on project potential and exploration success.
Joint Venture Terms and Incentives
The agreement also outlines a pathway for South32 to increase its interest to 80% by completing a pre-feasibility study, signaling a clear route towards potential mine development. AusQuest benefits from a 15% administration fee on all exploration expenditures, helping to cover overheads and support ongoing project generation.
Additionally, AusQuest can earn a US$300,000 bonus if at least two exploration opportunities are accepted by South32 within a calendar year, incentivizing the company to continuously identify and present high-quality prospects.
Outlook and Market Implications
AusQuest’s Managing Director, Graeme Drew, highlighted the extension as a strong endorsement of the company’s technical capabilities and project pipeline. The alliance provides a stable platform for AusQuest to continue delivering exploration success while sharing risk with a major industry player.
For South32, the agreement secures access to a steady flow of early-stage opportunities in Australia’s base metals sector, a strategic priority given the global demand for copper and zinc. The next 12 to 18 months will be critical as drilling programs ramp up on four current projects, potentially unlocking significant value for both parties.
Bottom Line?
The extended alliance sets the stage for a pivotal exploration phase, with South32’s funding and earn-in options poised to shape AusQuest’s growth trajectory.
Questions in the middle?
- Which specific projects will South32 prioritize for drilling in the next 18 months?
- How will exploration results influence South32’s decision to earn further equity?
- What are the potential timelines and hurdles for advancing projects beyond pre-feasibility?
