PepinNini has already reviewed geological data from the Mt Woods Inlier, near OZ’s Prominent Hill mine, and identified prospectivity for nickel sulphides and platinum group element mineralisation.

To earn an initial 40% interest in the project, PepiNini will spend $4.4 million, completing at least 8000m of drilling with its own equipment.

If OZ chooses not to contribute, PepinNini can earn an additional 40% by drilling a further 30,000m and spending $12 million, and by spending $15 million on a prefeasibility study and declaring a reserve.

PepinNini must spend the funds over 10 years and the expenditure includes the use of its equipment.

The company must raise $1.2 million before December 1.

PepinNini had $1.7 million cash at the end of June and is trying to raise up to a further $600,000 in a share purchase plan.

The company said OZ and its predecessors had spent more than $70 million on exploration in the area.

The agreement follows a similar Gawler Craton deal last week between OZ and Minotaur Exploration.

The two signed a heads of agreement to co-explore for copper resources at Mt Woods area, with Minotaur to conduct due diligence on the tenements before a potential JV is signed.

In recent years, OZ has all but abandoned regional exploration around Prominent Hill after having little success.

The company is choosing to focus on the development of its Carrapateena project, also in South Australia.

 

Shares in OZ rose 2.5% to $4.53, while PepinNini shares were unchanged at 1.3c.