Arcadia Minerals has granted Hongkong Xinhai Mining Services Limited an option to earn up to 70% of the Swanson Tantalum Project through a staged farm-in that links equity to a A$50,000 (about N$620,000) option fee, a A$1 million (about N$12.4 million) services commitment and the construction and commissioning of a processing plant.
Arcadia Minerals Limited controls the Swanson Tantalum Project through its subsidiary Orange River Pegmatite (Pty) Ltd, which holds Mining Licence ML223 and Exploration Licence EPL-5047 in southern Namibia.
The project is supported by a definitive feasibility study completed in May 2023, which assessed the development of a gravimetric processing operation targeting tantalum mineralisation hosted in pegmatite systems.
Xinhai has been granted a 45-day exclusive period to negotiate a definitive earn-in agreement, during which Arcadia may not engage any other parties regarding the project.
As consideration for exclusivity, Xinhai has paid an option fee of A$50,000, equivalent to about N$620,000.
Arcadia said that if Xinhai does not exercise the option within the exclusivity period, the option fee will convert into Arcadia shares at the same price as the company’s subsequent capital placement.
If the option is exercised, the cost will be credited against Xinhai’s payment obligation under a proposed strategic placement.
The term sheet outlines a staged earn-in structure under which Xinhai would earn its interest by delivering development work and infrastructure rather than through a single upfront cash payment.
The arrangement centres on the erection and commissioning of a gravimetric processing plant at ML223 with capacity no less than the maximum described in the 2023 feasibility study, as well as further exploration across EPL-5047 for mafic and ultramafic mineralisation and lithium- and tantalum-bearing pegmatites.
If a definitive agreement is executed, Xinhai would first earn an initial 15% equity interest in Orange River Pegmatite by providing A$1 million, or about N$12.4 million, worth of services to the project.
The term sheet specifies that these services must be delivered within six months of signing the definitive agreement, or the 15% equity interest will be forfeited.
Xinhai could then increase its interest to 50.1% upon completion of engineering design and the arrival on site of all construction equipment, machinery and plant required for project development.
No fixed monetary value is attached to this stage, but it requires Xinhai to fund and mobilise the complete engineering and construction package.
The final earn-in stage would lift Xinhai’s interest to 70% following the commissioning of a processing plant at ML223.
The plant must operate at a feed rate no less than the maximum potential outlined in the May 2023 feasibility study and perform at nameplate capacity at commissioning.
The term sheet includes dilution protections for Arcadia. The company will not be diluted if Xinhai undertakes additional exploration or expands the processing plant at ML223, and Arcadia will not be diluted until the completion of a definitive feasibility study for EPL-5047.
After completion of the final earn-in stage, Xinhai would hold a 70% interest across both licences, with Arcadia retaining the remaining 30%.
